An ideal Text Book for:

• Focus Writing • Letter & Application writing

• Short Note writing • Passage solution
• Argumentative writing • Important Quantitative Data
• Report Writing • Vocabulary for Translation

By
Saruwar Alam

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 Sukuk
Sukuk (plural of sakk) are referred to as ’Islamic bonds’ but the correct translation of the Arabic
word of Sukukis,’Islamic Investment Certificates’. Under Sukuk structure, the Sukuk holders
(investors) each hold an undivided beneficial ownership in the "Sukuk assets'. These Sukuk
represent the proportional ownership of an existing asset or a pool of diversified assets, and a
pledge against existing or future cash flows generated from these assets for a specified period of
time. The risk and return associated with underlying assets and these cash flows are passed to
sukuk holders. These assets may be tangible or intangible, existing or described with deferred
delivery, usufruct or services. Under Sukuk structure the investors, sukuk holders each hold an
undivided beneficial ownership in the underlying assets.

Sukuk VS Bond
Sukuk and bonds are two kinds of financial instruments; despite their differences, they share
similar responsibility of fund mobilizing from surplus (spending) units to shortage units. Sukuk
can resemble conventional bonds by some of its features, but it is technically neither debt nor
equity. It is complex to understand the exact nature of Sukuk and differentiating them from
bonds.

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The differences between Sukuk and conventional bonds lie in the very nature or purpose of
funding as well as the way Sukuk is structured. In case of Sukuk, income is generated from the
assets. Whereas; in conventional bonds, income (scheduled and often fixed) is generated from
debt instrument. Dislike conventional bonds in which the issuer is a borrower, in Sukuk, the
issuer is a seller of assets. Moreover; in case of Sukuk, there is a seller-buyer relationship but in
case of conventional bonds there is a lender-borrower relationship. The return in case of Sukuk is
“expected return” but in case of Bonds, it is pre-determined. In addition, in case of Sukuk, Sukuk
holder is considered the owner of assets whereas, in case of conventional bond, the bond holder
is a lender. As for as the risk management is concerned, the major risk in case of Sukuk lies with
underlying assets but in case of conventional bonds, the major risk (credit risk) lies with the
issuer of the bond. The face value of a conventional bond is based on the credit worthiness
(including its rating) of the issuer. But the face value of Sukuk is based on the market value of
the underlying asset. Bonds can be used to finance any project, business, asset or joint venture
that complies with the local legislation. But the assets on which Sukuk are based (underlying
asset) must be Shariah-compliant. In fact, Sukuk holders can be affected by the costs related to
the underlying asset and so higher costs will lead to lower investor profits. But conventional
bond holders are generally not affected by the cost related to the business, project, asset or joint
venture.

Bangla Bond

বাাংলা বন্ড হচ্ছে ববচ্ছের প্রথম বাাংলাচ্ছেবি টাকা বিনবমচ্ছনচ্ছটি বন্ড।এর ববচ্ছিষ বববিষ্ট্য হচ্ছলা এই
বচ্ছন্ডর সুোসচ্ছলর বহসাব হচ্ছব বাাংলাচ্ছেবি মুদ্রা টাকায়, পবরচ্ছিাধও করা হচ্ছব টাকায়। ফচ্ছল ববচ্ছের
অনযতম বৃহৎ পুজুঁ িবািার লন্ডন স্টক এক্সচ্ছেঞ্জসহ ববচ্ছের প্রবতষ্ঠিত অনযানয মুদ্রার তাবলকায়
বাাংলাচ্ছেবি টাকার পবরবেবত বাড়চ্ছব। বাাংলাচ্ছেচ্ছির ববসরকাবর খাতচ্ছক বববনচ্ছয়াচ্ছে উৎসাহ
বেচ্ছত ববেবযাাংক েরুচ্ছপর সহচ্ছ ােী ববসরকাবর খাতসাংক্রান্ত সাংস্থা ইন্টারনযািনাল ফাইনযান্স
কচ্ছপাচ্ছরিচ্ছনর
প (আইএফবস) সহায়তায় ১১ নচ্ছেম্বর, ২০১৯ তাবরচ্ছখ এ বন্ড োলু হয়। লন্ডন স্টক
এক্সচ্ছেচ্ছঞ্জ (এলইবস) এষ্ঠট ঐবেনই আনুিাবনকোচ্ছব তাবলকােুক্ত হয়। টাকা বলনচ্ছেন হচ্ছব লন্ডন
স্টক মাচ্ছকপচ্ছট। ব বকউ এই বন্ড বকনচ্ছত পারচ্ছব। িলার বেচ্ছয় এই বন্ড বকনচ্ছত হচ্ছব। বসই িলার
টাকায় কনোটপ হচ্ছয় তা বববনচ্ছয়াে করা হচ্ছব। প্রাথবমকোচ্ছব এ বন্ড বতন বছর বময়াবে করা হচ্ছলও
পচ্ছর তা বাবড়চ্ছয় পাুঁে বছর, বকাংবা েি বছর করা হচ্ছত পাচ্ছর। আইএফবস আোমী এক বছচ্ছর ১০০
বকাষ্ঠট িলার মূলযমাচ্ছনর বন্ড ছাড়ার প্রবতশ্রুবত বেচ্ছয়চ্ছছ। এ বচ্ছন্ড ববসরকাবর খাচ্ছতর াুঁরা বববনচ্ছয়াে
করচ্ছবন, তাুঁরা সুে পাচ্ছবন ৬ েিবমক ৩ িতাাংি। আর বন্ড বথচ্ছক টাকা ঋণ বনচ্ছয় াুঁরা তাুঁচ্ছের
বনচ্ছিচ্ছের বকাম্পাবনচ্ছত বববনচ্ছয়াে করচ্ছবন, তাুঁচ্ছের সুে পবরচ্ছিাধ করচ্ছত হচ্ছব ৯ েিবমক ৩
িতাাংি।প্রবাসীরা িলাচ্ছর এই বন্ড বকনচ্ছলও প্রথমবাচ্ছরর মচ্ছতা তা টাকায় রূপান্তর কচ্ছর বেচ্ছির
বববেন্ন অবকাঠাচ্ছমােত প্রকচ্ছে বববনচ্ছয়াে করা হচ্ছব। এই বচ্ছন্ডর মাধযচ্ছম ব অথ প সাংগ্রহ হচ্ছব, তা
বববনচ্ছয়াে করা হচ্ছব বতনষ্ঠট খাচ্ছত। খাত বতনষ্ঠট হচ্ছে-
• আবাসন,
• ক্ষুদ্রঋণ ও

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 • এসএমই (ক্ষুদ্র ও মাঝাবর বিে)
The London Stock Exchange welcomed the listing of the first-ever international Bangladesh
Taka-denominated “Bangla” bonds to its main market. Issued from IFC, one of the members of
the World Bank Group, this sets up the opening of the global Bangla bond market, essential to
support financing of Bangladesh companies while raising the international profile of the
Bangladeshi Taka. The Finance Minister of Bangladesh, AHM Mustafa Kamal commented that
the “the issuance of ‘Bangla Taka Bond‘ is the beginning of a long journey to our destination.”.
Lead arrangers on the bond were Standard Chartered Bank and Bank of America Merrill Lynch.
Taka bonds will continue to be issued for funding local currency by the IFC in Bangladesh. The
IFC raised 800 million Bangladeshi Taka (approximately GBP £7.4 million equivalent) of three-
year bonds, securing international investor support. The vice president and treasurer of the IFC,
Nena Stoiljkovic had the following to say:

“The first-ever Bangla bond issued by triple-A-rated IFC and listed on the London Stock
Exchange will help provide Taka-denominated solutions for PRAN Group to broaden its
operations and boost local jobs. We look forward to remaining an active partner in
Bangladesh’s journey to attain greater prosperity.”

This positive statement was followed by the IFC vice president and treasurer John Gandolfo
saying:

“The issuance of the inaugural Bangla bond is an important capital markets innovation. IFC is
committed to expanding local currency financing in emerging markets and we plan to continue
issuing Taka bonds to fund local currency transactions in Bangladesh.”

The listing of Bangla Bond is a silver lining among the dark clouds of uncertainty in Bangladeshi
private sector. Although the size of the initial offering is meagre compared to the demands of our
economy, it has the potential to be a groundbreaking event in our history in terms of alluring
foreign funds for investment in building essential infrastructures and play a crucial role to help
us achieve our Sustainable Development Goal Targets.

SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication, headquartered in
Belgium) is a global member-owned cooperative. it was founded in the 1970s, based on the
ambitious and innovative vision of creating a global financial messaging service, and a common
language for international financial messaging. As of 2018, around half of all high-value cross-
border payments worldwide used the SWIFT network. As of 2015, SWIFT linked more than
11,000 financial institutions in more than 200 countries and territories, who were exchanging an
average of over 32 million messages per day (compared to an average of 2.4 million daily
messages in 1995). SWIFT transports financial messages in a highly secure way but does not
hold accounts for its members and does not perform any form of clearing or settlement. SWIFT

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also sells software and services to financial institutions, much of it for use on the SWIFTNet
network, and ISO 9362 Business Identifier Codes (BICs, previously Bank Identifier Codes),
popularly known as "SWIFT codes". SWIFT Code is a standard format of Bank Identifier Codes
(BIC) and it is unique identification code for a particular bank anywhere in the world. These
codes are used when transferring money between banks, particularly for international wire
transfers. Banks also used the codes for exchanging other messages between them. SWIFT code
of Bangladesh bank is BBHOBDDHXXX.

SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled
by correspondent accounts that the institutions have with each other. Each financial institution, to
exchange banking transactions, must have a banking relationship by either being a bank or
affiliating itself with one (or more) so as to enjoy those particular business features.

Bangladesh Automated Clearing House (BACH)

BACH, the first ever electronic clearing house of Bangladesh, has two components - the
Automated Cheque Processing System (ACPS) and the Electronic Funds Transfer (EFT). Both
the systems operate in batch processing mode- transactions received from the banks during the
day are processed at a pre-fixed time and settled through a single multilateral netting figure on
each individual bank's respective books maintained with the Bangladesh Bank. A state-of-the-art
Data Center (DC) and a Disaster Recovery Site (DRS) have been established comprising of most
modern software and hardware for dealing with the operations of BACH. A Virtual Private
Network (VPN) has been created between the participating commercial banks and Data Center
(DC) & Disaster Recovery Site (DRS) for communicating necessary information related to
BACH. Digital Certificate has been formulated for the first time in Bangladesh for secured data
communication.

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 Statistics of Transaction Processed During December, 2020 to March, 2021

Bangladesh Electronic Funds Transfer Network (BEFTN)

BEFTN has started its 'Live Operation' on 28th February 2011 with the objective to decrease
paper-based payment methods and encourage electronic payment methods for secured, faster &
cost-effective transactions. The Network started with credit transactions and open for debits from
15 September 2011.

BEFTN facilitates the transmission of payments between the banks electronically, which makes
it faster and efficient means of inter-bank clearing over the existing paper-based system i.e.
BACPS. It is able to handle a wide variety of credit transfers such as payroll, foreign and
domestic remittances, social security, company dividends, retirement, expense reimbursement,
bill payments, corporate payments, government tax payments, social security payments and
person to person payments. The system could handle debit transfers such as mortgage payments,
loan payments, insurance premiums, utility bill payments, government tax payments,
government licenses and fees. EFT is gaining increasing popularity among the corporate and
govt. bodies. Approximately 13761853 EFT transactions having transaction volume of BDT
873.86 billion were processed during the FY2015 with an increasing trend. Salary of more than
28 ministries and govt. offices are now paid through EFT. Listed public companies are paying
their cash dividends through EFT network.

Tabular presentation of BEFTN credit transactions:

EFT Credit
Date Item Amount
Sep, 2015 1289254 69,912,457,414.74
Oct, 2015 849489 56,782,553,316.39
Nov, 2015 1202649 70,953,119,316.36
Dec, 2015 1253910 74,832,180,678.15

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 Tabular presentation of BEFTN debit transactions:

EFT Debit
Date Item Amount
Sep, 2015 52138 5,738,587,328.64
Oct, 2015 55965 4,693,225,620.15
Nov, 2015 57001 6,187,828,754.58
Dec, 2015 59352 5,555,489,204.41

Real Time Gross Settlement (RTGS)

To facilitate safe, secured and efficient interbank payment system, Bangladesh Bank introduced
Real Time Gross Settlement (RTGS) system on 29th October 2015 as part of its inclusive
digitalization initiative. It opened a new horizon in the arena of large value time critical payment
and settlement in the country. It was implemented with the financial assistance from Asian
Development Bank and technical support from the World Bank. The central RTGS system was
developed by the Swedish company CMA Small Systems AB. RTGS is an electronic settlement
system where transfer of funds takes place from one account of a bank to that of another bank on
a real-time and on gross basis. Real-time refers transactions that do not need any waiting period.
Transactions are settled as soon as they are executed. System is designed to settle high value
(more than or equal to 1, 00,000 BDT) local currency transactions as well as domestic foreign
currency transactions. It is worthwhile to mention that more than 7000 online branches of 55
scheduled banks are currently connected to this system out of total 11000 bank branches of 57
banks in the country. The system is currently allowed to handle only local currency, however
domestic foreign currency transactions are expected to be launched soon.

Trend of the transactions with RTGS is shown below:

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 BEFTN VS RTGS
In a world where cashless payments are taking charge of the economy, and security is key when
making inter-bank transfers, it is key and mandatory to know the difference and operation of the
terms.

RTGS and BEFTN are the terms that are used in context to bank transactions. In a broader sense,
both these terms are related to electronic money transfer from one bank to another bank. In
Bangladesh, both RTGS and BEFTN mechanism are maintained by Bangladesh Bank to ensure
the security of the transaction.

The main difference between RTGS & BEFTN is:

Transactions are processed Transactions are

and settled in batches, at processed and settled in
Settlement the end of the day real time and on gross level

Treasury Bills (T-Bills)

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Treasury Bill is a short term investment issued through auctions conducted by the Central Bank
of Bangladesh on behalf of the Government. Treasury Bill is a transferable instrument, where
your ownership can be transferred at any time by you. This makes it the safest and most liquid
investment opportunity available in the country. Since you can discount the Treasury Bill at any
time, it is almost like having cash in your hand. Treasury Bills are issued at a discount and the
face value is paid at maturity with interest paid up front. one can buy Treasury Bills which are
issued at three, six and twelve month maturity periods, either directly from Commercial Bank. A
Government Security is a tradable instrument issued by sovereign Government. It acknowledges
the Government's debt obligation. Such securities are short term (usually called treasury bills,
with original maturities of less than one year) or long term (usually called Government bonds or
dated securities with original maturity of one year or more). Major G-Secs in Bangladesh are: a.
Treasury Bills (T-Bills) b. Bangladesh Government Treasury Bond (BGTB).
Benefits of Treasury Bills-
• Issued by the Government and is 100% risk free.

• Market determined yield rates enabling you to receive the highest possible interest rates.
• Treasury Bills are tradable in the secondary market providing you with instant liquidity
by sale.

• You can make joint investments making Treasury Bills the ideal way to share wealth with
loved ones.

• No taxation and no stamp duty.

Treasury Bonds
Treasury Bond is a long term security instrument by which the government borrow from the
Banking system for long term as a part budgetary requirement. Currently there are four types of
Treasury Bond in the market in respect of maturing period. They are of 5 years, 10 years, 15
years and 20 years tenor.
Main features of Treasury Bonds-

o Risk free fixed coupon bearing debt instrument

o Maturities are available within 2-20 years.
o It carries half yearly coupon payment and the principal is repaid on maturity.
o Yield is determined by the market.
o Tradable instrument in the secondary market.
o Issued in scripless form.

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 Social safety net programs
Defined as a protective mechanism taken by the government to protect the poor and vulnerable
groups of the society. .The major social safety net programs (SSNPs) in Bangladesh can be
divided into four broad categories:

(i) employment generation programs;

(ii) programs to cope with natural disasters and other shocks;
(iii) incentives provided to parents for their children’s education; and
(iv) Incentives provided to families to improve their health status.

Various types of programs under these four categories like Food for Work, Scholarship for Poor
Students, Subsides, Old Age Allowance, Widow Allowance, Freedom Fighter Allowance,
Disability Allowance, Zakat etc. are effectively helping the poor people in Bangladesh.

In the budget for FY 2021-22, Finance Minister AHM Mustafa Kamal has set aside Tk107,614
crore for social protection, which is 17.83% of the budget and 3.11% of GDP. The budget also
earmarks Tk200 crore to bring another 220,000 beneficiaries under the coverage of the
‘Insolvent Disabled Person Allowance Program’.

Effective beneficiary targeting has been a weakness of safety net programmes in Bangladesh.
Universal social protection resolves the problem of beneficiary targeting by simply including all
relevant individuals under the aegis of social protection. In order to achieve the Sustainable
Development Goal (SDG) target 1.3 by 2030, Bangladesh needs to upgrade its social safety net
programmes (SSNPs) and national social security strategy (NSSS) immediately. The most
important and transformational step in reforming Bangladesh’s safety net programmes would be
to shift away from random and discretionary programmes and towards universal social
protection.

Default Loan/ NPL

A nonperforming loan (NPL) is a loan in which the borrower is default and hasn't made any
scheduled payments of principal or interest for some time. In banking, commercial loans are
considered nonperforming if the borrower is 90 days past due. The International Monetary Fund
considers loans that are less than 90 days past due as nonperforming if there's high uncertainty
surrounding future payments. A debt can achieve nonperforming loan status in several ways.
Examples of NPLs include:

• A loan in which 90 days' worth of interest has been capitalized, refinanced, or delayed
due to an agreement or an amendment to the original agreement.
• A loan in which payments are less than 90 days late, but the lender no longer believes the
debtor will make future payments.
• A loan in which the maturity date of principal repayment has occurred, but some fraction
of the loan remains outstanding.

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Causes of NPL from the Banks’ side:

Excessive interest rate, many other service charges and some secluded charges raised the amount
of installments of borrowers that kicked in as the key factor to loan default.

The failure of banks to provide the loans to the borrowers within the stipulated time. Relying on
banks’ commitment borrowers invested partially in the business/project before getting bank
loans and finally they incurred large amounts of loss due to the lack of timely finance (long
delay in actual disbursement).

When the borrowers were defaulted because of loss in business, banks denied lengthening the
current loan or granting a new loan. As a result borrowers couldn‘t escape from the difficulties,
hardly keeping up the businesses amiably and failing to repay the loans on time.

Borrowers claimed that many things were not clarified to them like upward adjustment of
interest rate, imposition of different charges etc. Also borrowers did not give due focus to that
part since they stayed busy getting the loan, without knowing the loan conditions appropriately.

In other cases, depending only on the personal relationship, bank managers sanctioned loans
without adequate collateral and proper analysis of business. In many of these cases, improper
documentation causes the loans to default.

Some clients divert their funds for other activities as they face no proper monitoring.

Nepotism in the loan sanctioning process often favored politically exposed persons (PEPs)
making the loan risky especially when nepotism is shown by top level management. In many
circumstances managers were deeply pressurized to disburse loans to the PEPs. In such cases,
loans had been disbursed without proper credit valuation or sanction-approach either in terms of
the viability of the project or the proper valuation of collateral..

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Sometimes, the ignorance of bank officials in the assessment of the necessity of loans leads to
loan default.

The greed of bankers is also liable for making a vulnerable banking sector to some extent by
disbursing loans to risky clients.

Causes of NPL from Clients’ side:

There are some habitual defaulters who are actually willfully providing wrong information to
take loans from banks without any intention of repayment. Because of imperfect information,
very often banks failed to properly identify this class of people.

Financial illiteracy of many clients causes their loans to default. They usually own small
businesses and have no idea of the pros and cons of banking operations. Financial literacy would
help them avoid these kinds of situations.

Fund diversion is one of the root causes of the creation of NPL. In such instances, management
diversified the fund and their business. One type of mentionable fund diversion is share market
investment from business money. Also, funds are diverted for medical purposes, family affairs,
repaying loans taken from various sources, house building, and other businesses etc.

The installment size is too big or rescheduling period too small for borrowers to avail conditions
for rescheduling.

Due to sales on credit, in many cases, small businessmen face losses in businesses. When they
fail to run businesses, they fail to recover the money from the debtors in due time (or totally
unrecovered).

In other states, borrowers use the bank-disbursed working capital for buying fixed assets. rather
than starting businesses. Eventually, the loan becomes defaulted because of this.

How does one get out of this messy NPL situation? What is the remedy?

We know, “prevention is better than cure”. Firstly it has to be ensured that no new loans get
classified. To make this happen, one needs to fortify lending discipline in the FIs. This will
involve intervention at four levels:

First, with strong and self-reliant internal control and compliance (ICC), the FIs must guarantee
appropriate KYC and due diligence to satisfactorily assess a loan proposal and flawlessly settle
market potential, value of the collateral and optimum credit needs.

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Second, the management should satisfactorily resolve all issues flagged by the ICC.

Third, on the basis of strict objective criteria the selection and appointment of board members
should be done and there should be a mechanism in place to monitor the performance of the
board members.

Fourth, the supervisory capability of the Bangladesh Bank needs to be strengthened.

Necessary legal reforms to strengthen and expedite the legal process should be undertaken
immediately for the improvements on the recovery front. Two measures can bring about
important instant enhancements in the situation: A dedicated bench should be set up at the high
court to dispose of loan-related writ cases and loan defaulters should be required to pay a certain
percentage of their outstanding debt before they seek stay order on legal proceedings against
them.

For NPL resolution mechanism, Effective Bankruptcy Act and Asset Management Company
should be put in place as an alternative, particularly to deal with default cases under-covered by
collateral and those involving influential borrowers.

Finally, the existing rescheduling facility needs to be made more accommodative, for a large
proportion of cases, where the default is due to genuine business failure or fund disbursement
delays by the bank.

Free Market Economy

The free market is an economic system based on supply and demand with little or no government
control. In a truly free market, a central government agency does not regulate any aspect of the
economy. Free markets are characterized by a spontaneous and decentralized order of
arrangements through which individuals make economic decisions. Based on its political and
legal rules, a country's free market economy may range between very large or entirely black
market. In a free or pure market economy, sellers of different goods don’t face any barriers.
Essentially, one can sell any product they wish to sell and at any price. However, in the real
world, such an economic system rarely exists. Tariffs imposed on imports and exports and legal
restrictions such as the age restriction on alcoholic beverages are all barriers to a free market.

Main features

• voluntary exchange
• the laws of supply and demand provide the sole basis for the economic system, without
government intervention

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 • the absence of coerced (forced) transactions or conditions on transactions
• Private ownership of resources
• Thriving financial markets
• Freedom to participate
• Customers drive choices

ADR
Advance Deposit Ratio (ADR) is considered as a barometer of progress of all financial
institutions. ADR is the ratio of total advances to total deposits, where advances comprise all
banking advances, except foreign currency (FC), held against export development fund (EDF),
refinance and offshore banking unit (OBU) exposure. Deposit comprises all demand and time
deposit excluding bank deposit and additional net borrowing. A high ADR shows that banks are
generating more credit from its deposits and vice-versa. The outcome of this ratio reflects the
ability of the bank to make optimal use of the available fund. ADR of commercial banks has
great significance. Primarily, it is a measure of the utilization of fund by the banking system.
This ratio is an important tool of monetary management. Magnitude of the said ratio indicates
management's aggressiveness to improve income through higher lending. Proper ADR is a
delicate balance for banks. If banks lend too much of their deposits, they might overextend
themselves, particularly during an economic slump. However, if banks lend less of their deposits,
they might have opportunity cost since their deposits would be sitting on their balance sheets and
earning no revenue.

Bangladesh Bank (BB) has issued a circular enhancing the banks’ advance to deposit ratio
(ADR) by 2% to increase credit supply and attract more investments, as Bangladesh faces tough
times due to the COVID-19 pandemic.  According to the circular, Investment-Deposit Ratio
(IDR) for Islamic banks will be enhanced to 92% from 90%, while the ADR of conventional
banks will be increased from 85% to 87%, effective the 15th of April 2020.

The loan-to-deposit ratio is used to assess a bank's liquidity by comparing a bank's total loans to
its total deposits for the same period. To calculate the loan-to-deposit ratio, divide a bank's total
amount of loans by the total amount of deposits for the same period.

In a nutshell, to pursue the required ADR requirement all SCBs and PCBs should act proactively
and assess their internal and external environment thoroughly, in order to remain competent in
the banking sector under given circumstances and challenges.

13
 Balance of Payments (BOP)
The balance of payments (BOP) is a statement of all transactions made between entities in one
country and the rest of the world over a defined period of time, such as a quarter or a year.

KEY TAKEAWAYS

• The balance of payments includes both the current account and capital account.
• The current account includes a nation's net trade in goods and services, its net earnings on
cross-border investments, and its net transfer payments.

14
 • The capital account consists of a nation's transactions in financial instruments and central
bank reserves.
• The sum of all transactions recorded in the balance of payments should be zero; however,
exchange rate fluctuations and differences in accounting practices may hinder this in
practice.

The Bangladesh Bank has been following a new classification system for Balance of Payments
(BOP) presentation as per the 6 th edition of the IMF’s Balance of Payments Manual (BPM6)
from the fiscal year 2012-13. As defined by the International Monetary Fund, the Balance of
Payments is a statistical statement for a given period showing:

a) Transactions in goods, services and income between an economy and the rest of the world;

b) Changes in the economy’s monetary gold, special drawing rights (SDRs) and other financial
claims on and liabilities to the rest of the world;

c) Transfers and counterpart entries that are needed to balance, in an accounting sense, any entry
for the foregoing transactions and changes which are not mutually offsetting.

As per BPM6 the standard components incorporated in the Bangladesh Balance of Payments
statements are grouped under three major categories:

1) Current Account

2) Capital Account and

3) Financial Account.

The current account under the balance of payments of Bangladesh for 2019-20 recorded a deficit
of Tk. 3,31,562 million on the current account as against a deficit of Tk. 3,34,891 million in the
previous year. The trade balance was recorded a deficit of Tk. 14,94,114 million during the fiscal
year 2019-20 as compared to the deficit of Tk. 13,01,600 million in the previous fiscal year. A
net capital account inflow of Tk. 21,742 million was recorded during the year 2019-20 against
Tk. 19,555 million of the previous year. At the same time, a net financial decrease of Tk.
3,94,312 million was recorded against a decrease of Tk. 4,15,893 million of the previous year.
Net direct investment recorded a phenomenal decrease of 51.14 percent compared to the
previous year.

Cash reserve ratio

The cash reserve requirement (or cash reserve ratio) is a central bank regulation that sets the
minimum amount of reserves that must be held by a commercial bank. Under cash reserve ratio
(CRR), the commercial banks have to hold a certain minimum amount of deposit as reserves
with the central bank. The percentage of cash required to be kept in reserves as against the bank's

15
total deposits, is called the Cash Reserve Ratio. Banks can’t lend the CRR money to corporates
or individual borrowers, banks can’t use that money for investment purposes. And Banks don’t
earn any interest on that money.

On the backdrop of economic downturn emerged from the COVID-19 pandemic, the Cash
Reserve Requirement (CRR) for the scheduled banks with the Bangladesh Bank was reduced by
150 basis points in two parcels to 4.0 percent of their total demand and time liabilities to enhance
adequate liquidity in the economy in FY20. It may be mentioned here that banks are required to
maintain CRR at the rate of 4.0 percent on bi-weekly average basis provided that the CRR would
not be less than 3.5 percent in any day with effect from 15 April, 2020.

Statutory Liquidity Ratio (SLR)

Statutory Liquidity Ratio or SLR is a minimum percentage of deposits that a commercial bank
has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve
requirement that banks are expected to keep before offering credit to customers. These are not
reserved with the Centeal Bank, but with banks themselves. The SLR is fixed by the centrl
bank. CRR (Cash Reserve Ratio) and SLR have been the traditional tools of the central bank's
monetary policy to control credit growth, flow of liquidity and inflation in the economy.

According to the amendment of sub section (2) under section 33 of the Bank Company Act,
1991, it was decided that banks should have maintained SLR separately, (a) for the conventional
banks- the statutory liquid assets inside Bangladesh, which also includes excess reserves with
Bangladesh Bank, will not be less than 13.0 percent of their total demand and time liabilities, and
(b) for the shariah based Islami banks- this rate shall not be less than 5.5 percent. This became
effective on February 01, 2014 and remained unchanged in FY20.

Bank Rate
A bank rate is the interest rate at which a nation's central bank lends money to domestic banks,
often in the form of very short-term loans. Managing the bank rate is a method by which central
banks affect economic activity. Lower bank rates can help to expand the economy by lowering
the cost of funds for borrowers, and higher bank rates help to reign in the economy when
inflation is higher than desired. Bank rates influence lending rates of commercial banks. Higher

16
bank rate will translate to higher lending rates by the banks. In order to curb liquidity, the central
bank can resort to raising the bank rate and vice versa.

KEY TAKEAWAYS

• The bank rate is the interest rated charged by a nation's central bank for borrowed funds.
• The Board of Governors of the central bank set the bank rate.
• The central bank may increase or decrease the discount rate to slow down or stimulate the
economy, respectively.
• There are three types of credit issued by the Federal Reserve System to banks: primary
credit, secondary credit, and seasonal credit.

After introduction of repo and reverse repo windows for banks on November 6, 2003; the use of
bank rate became very much limited. However, BB has prudently been using bank rate mostly
for providing refinance facilities to banks and penalizing them for any departure from
maintenance of CRR as per set rules of BB. The bank rate remained unchanged at 5.00 percent in
FY20.

IPO

An unlisted company (A company which is not listed on the stock exchange) announces initial
public offering (IPO) when it decides to raise funds through sale of securities or shares for the
first time to the public. Initial public offering is the process by which a private company can go
public by sale of its stocks to general public. It could be a new, young company or an old
company which decides to be listed on an exchange and hence goes public. In other words, IPO
is the selling of securities to the public in the primary market. A primary market deals with new
securities being issued for the first time. After listing on the stock exchange, the company
becomes a publicly-traded company and the shares of the firm can be traded freely in the open
market.The company which issues shares to the public is referred to as the issuer.

There are two common types of IPO.

Fixed Price Offering

Fixed Price IPO can be referred to as the issue price that some companies set for the initial sale
of their shares.

Book Building Offering

In the case of book building, the company initiating an IPO offers a 20% price band on the
stocks to the investors. The interested investors bid on the shares before the final price is
decided.

Credit Crunch
A credit crunch refers to a decline in lending activity by financial institutions brought on by a
sudden shortage of funds. Often an extension of a recession, a credit crunch makes it nearly

17
impossible for companies to borrow because lenders are scared of bankruptcies or defaults,
resulting in higher rates.

KEY TAKEAWAYS

• A credit crunch refers to a decline in lending activity by financial institutions brought on

by a sudden shortage of funds.
• A credit crunch often occurs in recessions, making it nearly impossible for companies to
borrow because lenders are scared of bankruptcies or defaults.
• A credit crunch often follows a period in which lenders are overly lenient in offering
credit and results in higher rates as a way to compensate the lender for taking on the
additional risk.

Offshore banking unit

An offshore banking unit (OBU) is a bank shell branch, located in another international financial
center. For instance, a London-based bank with a branch located in Delhi. An offshore banking
unit (OBU) is a financial service unit (normally a branch or subsidiary of a non-resident bank),
which plays an intermediary role between non-resident borrowers and lenders. The advantage of
an offshore banking unit versus that of an onshore bank is that the offshore banking unit is free
of regulations and restrictions normally imposed on domestic financial establishments as it
pertains to foreign exchange and sometime tax concessions and relief packages. The activities of
an offshore banking unit are not subject to the local restrictions as there might be on foreign
exchange or other banking activities or regulations. Under law, offshore banking units (OBUs)
are not authorized to take domestic deposits or conduct activity with local establishments or
clients. All trade activity of the offshore banking unit must be offshore.

Offshore banking in Bangladesh came into being in 1985 through a Bangladesh Bank circular,
mainly to create greater financing opportunities at the Export Processing Zones (EPZ). Since
then it has become popular among business enterprises as well as banks in Bangladesh due to its
capacity to attract global settlements and foreign currency financing facilities. According to a
report in the Financial Express, total outstanding loan from Offshore Banking Unit (OBU) has
crossed BDT 600.0 billion. Currently, 35 banks are actively participating in offshore banking,
most of whom are doing business for discounting of import and export bills, and also for
extending long term foreign currency financing facility to the corporates.

According to the 1985 BB Circular, OBU was free to accept deposit/borrowing from overseas
entities including non-resident Bangladeshis (NRBs) and free to lend to Type-A (wholly foreign
owned) EPZ enterprises. Type-B (partially foreign owned) and Type-C (only local ownership)
enterprises were also allowed to avail OBU term loans subject to approval from the Board of
Investment (now known as Bangladesh Investment Development Authority or BIDA).
Afterwards, Bangladesh Bank relaxed regulations to allow various businesses to get facilities
from OBU including discounting facilities of import and export bills. OBU was exempted from
certain provisions of Banking Company Act 1991 including waiver from maintaining CRR and

18
SLR, statutory capital and reserve or liquidity requirements. Interest payable on foreign currency
liabilities in OBU was also exempted from payment of income tax.

NEW OBU POLICY: Bangladesh Bank has come up with a comprehensive guideline on
Offshore Banking Operations on February 25, 2019 to bring offshore banking under a stringent
regulatory framework. The new policy offered a lot of changes and imposed restrictions on
export financing and others. Later on, Bangladesh Bank eased the policy by amending few of its
clauses through the revised circular issued in May 27, 2019.

An offshore banking facility can provide a number of benefits including-

• Banking in the International level within the country.

• OBU may accept deposits and provide investment in freely convertible foreign currencies.

• The transactions/operations of OBUs are free from set rules/regulations of Bangladesh

Bank and other local regulators.

• Advantages of low or nonexistent taxes/levies so that its customers can enjoy unique
package of tax benefit.

• Higher profit on deposit.

• Multi Currency Account facility.

• Easy unlimited ins and out of fund

• Extra services that local bank might not be able to offer

• The convenience of international banking

Offshore Banking Operations have played a pivotal role in the economic expansion of the
country by arranging low cost financing compared to domestic currency lending. As most of the
central banks around the world are cutting interest rate to support their local economies, we may
take advantage of the situation by being able to borrow at lower cost while local currency interest
rate remains high. In this global context, tightening the policy might be counterproductive and
costly. A comprehensive policy would be much appreciated to bring discipline in OBU
operations.

Money Market
Money Market is a segment of the financial market in which financial instruments with high
liquidity and very short maturities are traded. The money market is used by participants as a

19
means for borrowing and lending in the short term from several days to just under a year. Money
market securities consist of negotiable certificates of deposit (CDs), banker’s acceptances,
Treasury-bills, commercial paper and repurchase agreements (repos). The primary money market
is comprised of banks, financial institutions and primary dealers as intermediaries and savings
and lending instruments, treasury bills as instruments. There are currently 15 primary dealers (12
banks and 3 financial institutions) in Bangladesh. The only active secondary market is overnight
call money market which is participated by the scheduled banks and financial institutions. The
money market in Bangladesh is regulated by Bangladesh Bank.

The instruments of Money Market

(a) Treasury bill, (b) commercial paper, (c) banker’s acceptance, (d) certificate of deposit, (e)
repurchase agreement, (f) short-term treasury notes and bonds, (g) international
emergency deposit

Major players of Money Market

Bangladesh Bank, Government, Commercial Banks, Mutual Funds, Primary Dealers, Financial
Institutions & Corporate Firms.

Capital Market
Capital Market is a market for buying and selling equity and debt instruments. Capital markets
channel savings and investment between suppliers of capital (such as retail investors and
institutional investors) and users of capital (like businesses, government and individuals). Capital
markets are vital to the functioning of an economy since capital is a critical component for
generating economic output. The primary segment of capital market is operated through private
and public offering of equity and bond instruments. The secondary segment of capital market is
institutionalised by 2 stock exchanges — Dhaka Stock Exchange (DSE) and Chittagong Stock
Exchange (CSE). The instruments in these exchanges are equity securities (shares), debentures,
corporate bonds and treasury bonds. The capital market is governed by Bangladesh Securities
and Exchange Commission (BSEC).

The instruments of Capital Market-

(a) common stock, (b) preferred stock, (c) mortgage bond, (d) treasury notes and bonds, (e)
corporate notes and bonds, (f) government notes and bonds

Major players of the Capital Market

• Investors
• Issuers
• Financial intermediaries (middlemen or brokers)
• Dealers

20
• Mutual Funds
• Market Makers,
• Investment Banks
• Depositors
• Clearing House
• Infrastructure Providers
• Stock Exchanges
• Information Providers
• Regulators
• Bangladesh Securities & Exchange Commission (BSEC)
• Rating Agencies

Differences between Money Market and Capital Market

Factors Money Market Capital Market
A segment of the financial
market where
lending and borrowing of A section of financial
short term market where long term
Meaning securities (such as bond or securities (such as shares
treasury bills and stocks) are
which have maturity period issued and traded.
of less than
one year) are done.
Nature of market Informal Formal
Shares, debentures, bonds,
Treasury bills, commercial
retained
papers,
Financial instruments earnings, asset
certificate of deposit, trade
securitisation, euro issues
credit etc.
etc.
Risk factor Low Comparatively high
Time horizon Within a year More than a year
Increases liquidity of funds
Mobilisation of savings in
Merit in the
the economy.
economy.
Return on investment Less Comparatively high

Key Differences between Share and Stock

Factors Share Stock
A share is defined as the The stock is a mere
Definition
smallest division of collection of the shares of a

21
 the share capital of the
company which
represents the proportion of
ownership of the
shareholders in the
company. The shares are
the bridge between the
shareholders and the
company. The shares are
offered in the stock
market to raise capital for
the company.
The capital of a company, is
divided into small
Meaning
units, which are commonly
known as shares.
Is it possible for
Yes. It is possible for a
a company to
company to make
make original
original issue.
issue?
Shares can be partly or fully
Paid up value
paid up.
A share has a definite
Definite number number known as
distinctive number.
Fractional Fractional transfer of share
transfer is not possible.
Nominal value Share has nominal value.
Denomination of share is
Denomination
equal amounts.
Differences between Credit Card and Debit Card
Factors Credit Card
Credit card is issued by a
bank to allow the
cardholder to purchase
Meaning goods and services on
credit. The payment is made
by the bank on the
customer's behalf.
Implies Pay later
Bank account is not
Bank Account
prerequisite for issuing a
member of a company in a
lump sum. When the
shares of a member are
converted into one fund is
known as stock. A public
company limited by
shares can convert its fully
paid-up shares into
stock. However, the original
issue of stock is not
possible.
The conversion of the fully
paid up shares of a
member into a single fund is
known as stock.
No. It is not possible.
Stock can only be fully paid
up.
A stock does not have such
number.
Fractional transfer of stock
is possible.
Stock does not have nominal
value.
Denomination of stock is
unequal amounts.
Debit Card
Debit card is issued by a
bank to allow its
customers to purchase goods
and services whose
payment is made directly
through the customer's
account linked to the card.
Pay instantly
Bank account is a must for
issuing a debit card.
22
 credit card.
The credit limit set by the
The maximum limit of
credit issuer. Limits
withdrawing money will be
increase or stay the same
Limit less than the money lying in
over time as a
the saving bank
borrower's creditworthiness
account.
changes.
The holder of the card has to There is no such bill and the
pay the credit card amount is directly
Bill
bill within 30 days of every deducted from the
month. customer's account.
Interest is charged when
payment is not made to
No interest is charged
Interest the bank within a specified
because no money is
Charged time period. The
borrowed.
interest rate is usually very
high.
High. If someone steals the
original cardholder’s
card and makes purchases,
than money is removed
from his/her bank account.
Low. Rarely held liable for
Fraud Liability Investigating this
fraudulent activity.
damage takes time. The
longer s/he wait to report
the fraud, the more likely
s/he will be held liable for
his/her own losses.

Green Bonds
A green bond is a type of fixed-income instrument that is specifically earmarked to raise money
for climate and environmental projects. These bonds are typically asset-linked and backed by the
issuing entity's balance sheet, so they usually carry the same credit rating as their issuers’ other
debt obligations.

Green Bonds are bonds where proceeds from fixed-income and liquid financial instruments are
applied and specifically earmarked to raise money, in part or in full, new and/or existing eligible
climate-mitigation and adaption projects and other environmentally beneficial activities. For both
the issuer and the investor - a bond is a very beneficial instrument. By issuing a bond - the issuer
gets the required fund whereas the investors will receive interest and the principal amount. The
issuer of green bonds borrows the money from bond investors to mitigate climate change and
adapt the same to build climate resilience projects and other environmentally beneficial
activities. Green Bonds issued by bank/FI will be treated as “Green equity”.

23
Banks and FIs, Ministry of Finance, Development Banks (e.g. BIFFL, IDCOL, etc.) are the
possible issuers of green bonds in Bangladesh. On the other hand, possible investors for green
bonds are - Pension Fund, Large corporate, Insurance companies, Asset managers, banks and FIs
as well as International investors.

Dating back to the first decade of the 21st century, green bonds are also referred to as climate
bonds. Iberdrola has consolidated its status as the biggest group issuer of green bonds in the
world; and at the start of 2021 it issued the biggest hybrid green bond in history, worth €2
billion. A total of 90 % of Iberdrola's 2020-2025 investment plan - with an allocation of 75
billion euros until 2025 and an estimated of 150 billion euros to 2030 — is aligned with the
European Union taxonomy for mitigating climate change.

KEY TAKEAWAYS

• A green bond is a fixed-income instrument designed specifically to support specific

climate-related or environmental projects.
• Green bonds typically come with tax incentives to enhance their attractiveness to
investors.
• The World Bank issued the first official green bond in 2009.
• On 5 July 2007, the European Investment Bank (EIB) launched a very special issue for
the first time: green bonds

Key stakeholders in Bangladesh for green bonds are - 1. Ministry of Finance: Responsible for
state budget, taxation and economic policy. 2. Bangladesh Bank: Sets (green) policies for Banks
and FIs. 3. SREDA: Sets framework to develop pipeline sustainable energy projects. 4. BSEC:
Sets regulations concerning trade of fixed income products. 5. NBR: Sets tax policy on fixed
income products. 6. DSE & CSE: Stock exchanges where listed share/bonds are traded. 7. IDRA:
Sets regulations for the insurance sector.

MAIN USES OF GREEN BONDS

Green bonds are wholly used for green projects that impact positively on the environment. For
instance:

Renewable energy

Energy efficiency

Clean transportation

Waste management

24
GREEN BONDS PRINCIPLES

• The funds will be used for green projects that will have a beneficial effect on
the environment.

• The issuer of a green bond must transparently notify the investors of the environmental
sustainability goals, allowing for them to be assessed and externally reviewed.

• The funds management will be appropriately and transparently controlled by the issuer,
which will allow an auditor to perform a complementary review.

• The issuer of this type of bonds will periodically update the information about how the
funds are used and the environmental benefits obtained.

• In this most recent update to its green financing framework, Iberdrola has also added
its alignment with the principles of the European Union taxonomy to drive private
investment in sustainable growth and to contribute economically to a neutral climate
economy, and standard for issuing green bonds in the EU.

Green Banking

Green banking means promoting environmental friendly practices and reducing your carbon
footprints from your banking activities. This is an eco-friendly financing. Banks’ concern about
environmental well-being while financing to businesses is considered as green banking.
According to Bangladesh central bank—“Green banking is a component of the global initiatives
by a group of stakeholders to save environment” Green banking has a positive connection with
sustainable development goals such as goal no. 7, 9, 11, 12, and 13. Green or sustainable banking
is not limited only to inhouse green activities, but extends to facilitating green financing.
Environmental Risk Management (ERM) guidelines is a part of green banking. Green banking
initiatives of Bangladesh Bank (BB) has broadly categorized into the following aspects:

• Effective policy initiatives,

• Stricter monitoring of green banking activities of banks and NBFIs,
• Refinance support from BB in diverse green products/sectors/green projects/initiatives
and
• BB's own initiatives for environmental management.

Green Banking Activities:

25
 List of 52 Green Products

Sector(s) Sub-Sector(s) Green Initiative(s)

1. Solar Home System
2. Solar Micro/Mini Grid
3. Solar Irrigation Pumping System
4. Surface Water Purification Plant using Solar Pump
5. Solar Photovoltaic (PV) Assembly Plant
Solar Energy
6. Solar Photovoltaic (PV) Power Plant
1. Renewable 7. Solar Cooker Assembly Plant
Energy 8. Solar Water Heater Assembly Plant
9. Solar Air Heater & Cooling System Assembly Plant
10. Solar Energy Cold Storage
11. Setting up of Bio-gas Plant in existing Dairy &
Poultry Farm
Bio-Gas
12. Integrated Cow Rearing and Setting up of Bio-gas
Plant

26
 13. Organic Manure from Slurry
14. Mid Range Bio-gas Plant
15. Biomass based Large Scale Bio-gas Plant
16. Poultry & Dairy based Large Scale Bio-gas Plant
Hydro-Power 17. Hydropower (Pico, Micro & Mini)
Wind-Power 18. Wind Energy Driven Power Plant
19. Substitution of Conventional Lighting System,
electronic material, Boiler with energy efficient
alternatives on the basis of Energy Audit
20. Auto Sensor Power Switch Assembly Plant
21. Energy efficient Improved Cook Stove (ICS)/ICS
2. Energy Efficiency Renewable/Hybrid Cook Stove Assembly Plant
22. LED Bulb/Tube Manufacturing Plant
23. LED Bulb/Tube Assembly Plant
24. Substitution of Conventional Lime Kiln by Energy
Efficient Kiln
25. Waste Heat Recovery System
3. Alternative 26. Production of Burnable Oil from waste Tire by the
Energy Process of Pyrolysis
27. Biological Effluent Treatment Plant (ETP)
28. Biological & Chemical Technology Combined ETP
29. Conversion of Chemical ETP to Combination type
Liquid Waste (Chemical + Biological) of ETP
Management 30. Chemical ETP
31. Central ETP
4. Waste 32. Waste Water Processing Plant
Management 33. Sewerage Liquid Processing Plant
34. Methane Recovery from Municipal waste & to
produce Power
Solid Waste
35. Municipal waste to Compost
Management
36. Hazardous waste treatment facility
37. Scum Management & Processing facility
38. PET Bottle Recycling Plant
39. Plastic Waste Recycling Plant
(PVC/PP/LDPE/HDPE,PS)
40. Wastage Paper Recycling Plant for Production of
5 . Recycling &
recycled paper, plate, mug, glass
Recyclable
41. Recyclable Baggage Manufacturing Plant
Initiatives
42. Recyclable Poly Propylene Thread & Baggage
Manufacturing Plant
43. Solar Battery Recycling Plant
44. Used Lead Acid Battery Recycling Plant

27
 45. Compressed Block Brick
46. Autoclaved Aerated Concrete
6. Green Brick
47. Modern Tech Brick (Zigzag, Improved Zigzag,
Manufacturing
HHK, Tunnel, VSBK, Conversion of FCK to any of the
above)
7. Green 48. Certified Green Industry/Green Building
Establishment 49. Green Featured Building/Green features of Building
50. Ensuring Work Environment & Security of Workers
Factories
8. Miscellaneous
51. Vermicompost
52. Palm Oil Plant

Green bank
A green bank (sometimes referred to as green investment bank, clean energy finance authority,
or clean energy finance corporation) is a financial institution, typically public or quasi-public,
that uses innovative financing techniques and market development tools in partnership with the
private sector to accelerate deployment of clean energy technologies. Green banks use public
funds to leverage private investment in clean energy technologies that, despite being
commercially viable, have struggled to establish a widespread presence in consumer
markets.Green banks seek to reduce energy costs for ratepayers, stimulate private sector
investment and economic activity, and expedite the transition to a low-carbon economy.

In the United States, green banks have been created at the state and local levels. The United
Kingdom, Australia, Japan, New Zealand and Malaysia have all created national banks dedicated
to leveraging private investment in clean energy technologies. Together, green banks around the
world have driven approximately $30 billion of clean energy investment. The Green Bank
Network is an international membership organization focusing on solutions to clean energy
finance. It was launched at the 2015 COP21 meeting in Paris, by state and national Green Banks
in Connecticut, Australia, Malaysia, New York, Japan and the United Kingdom, and the non-
profits the Natural Resources Defense Council (NRDC) and the Coalition for Green
Capital (CGC).

100 years of CPC/Centenary Celebration of CPC

Celebrations of the 100th anniversary of the founding of the Communist Party of China
culminated in a ceremonial event to celebrate the centennial of the founding of the Chinese

28
Communist Party (CCP), which has been the sole governing political party of the People's
Republic of China (PRC) since 1949. The event took place as scheduled on 1 July 2021 in
Beijing.CCP General Secretary Xi Jinping, as the guest of honor, delivered a speech and
presented the Order of July the First order of honour to CCP members who have made
significant contributions. Premier Li Keqiang served as the official host of the event.

Similar celebrations were scheduled nationwide in Mainland China in 22 of the 23 claimed

provinces (except Taiwan Province), 5 autonomous regions, 3 other municipalities of Shanghai,
Tianjin and Chongqing and the 2 special administrative regions of Hong Kong and Macau. The
first joint rehearsal for the celebration activities of the 100th anniversary of the founding of the
CCP took place on 13 June 2021. Security has been strengthened leading up to the celebrations
with an increase in the number of officers of the People's Armed Police and officers of the state
security police in the capital of Beijing. The first press conference of the Celebration of the 100th
Anniversary of the Founding of the CCP hosted by the Press Center for the Celebration of the
100th Anniversary of the Founding of the CCP took place on 27 June 2021.
The celebrations kicked off with a China Central Television-produced theatrical musical concert
held on the Beijing National Stadium on 28 June 2021.
Throughout June 2021, light shows took place in celebration of the anniversary in multiple
Chinese cities including Beijing, Shanghai and Shenzhen. A national celebrations and rally of
70,000 took place on Tiananmen Square in Beijing. It was attended by CCP General
Secretary Xi Jinping, former General Secretary Hu Jintao, Chinese Premier Li Keqiang, former
Premier Wen Jiabao and members of the Politburo of the Chinese Communist Party. Hong
Kong and Macau Chief Executives Carrie Lam and Ho Iat-seng were also in attendance.
However, former CCP General Secretary Jiang Zemin and former Chinese Premier Zhu
Rongji were absent. The ceremony began with a flag raising ceremony by the PLA Honour
Guard after it marched off from the sides of the Monument to the People's Heroes, with a gun
salute of 56 gunners being fired 100 times in the back ground. The Flag of China was raised to
the tune of the March of the Volunteers. Then, Chairman Wan Exiang delivered a congratulatory
message on behalf of the Revolutionary Committee of the Chinese Kuomintang and
other political parties in China. The Communist Youth League of China and the Young Pioneers
of China also read a message of congratulations.
Later, General Secretary Xi Jinping delivered a speech in which he specifically announced the
realization of the first goal of the Two Centenaries goal set. It concluded with the performance
of The Internationale and the Ode to the Motherland. The traditional military parade was
replaced by a flypast of Chinese aircraft. Seventy-one People's Liberation Army Air
Force fighters flew over Tiananmen Square, with helicopters and fighter jets forming the words
"100" and "71".On 21 June 2021, the People’s Bank of China issued a set of commemorative
coins for the 100th anniversary of the founding of the CCP. There are nine commemorative coins
in this set. Since June 2021, the "Glorious 50 Years in the Party" Commemorative Medal has
been awarded, and the award will continue until 1 July. It consists of the party emblem, a five-
pointed star, the flag, a monument, a sunflower, and other elements. The CCP award ceremony
to present the 1 July Medal to outstanding CCP members took place on 29 June 2021. As of 27
June 2021, according to the International Liaison Department of the Chinese Communist Party,
more than 1,300 congratulatory messages were received from some 150 head of states and 200
major political parties worldwide.

29
CEO of SpaceX and Tesla, Inc Elon Musk congratulated China's "economic prosperity" on the
100th anniversary of Chinese Communist Party and tweeted that what China has achieved is
truly amazing, especially in infrastructure and he encouraged people to visit and see for
themselves.

The Party has evolved into a dynamic phenomenon of development, dynamism and meritocracy
that has redefined social and economic development by poverty eradication by the end of 2020,
being the pioneer of unprecedented economic growth, preserving harmony and security of the
Chinese people without the use of military might. The CPC has drawn its legitimacy not only by
founding the People's Republic of China but by delivering results that even developed countries
have not witnessed.

RCEP
‘A victory of multilateralism and free trade’
Chinese premier Li Keqiang when signed

The Regional Comprehensive Economic Partnership or RCEP is a free trade agreement among
the Asia Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, India, Japan, Laos,
Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and
Vietnam. The 16 member countries account for about 30% of the world's population (2.2 billion
people) and 30% of global GDP ($26.2 trillion) as of 2020, making it the biggest trade bloc in
history. Unifying the preexisting bilateral agreements between the 10-member ASEAN and five
of its major trade partners, the RCEP was signed on 15 November 2020 at a virtual ASEAN
Summit hosted by Vietnam, and will take effect 60 days after it has been ratified by at least six
ASEAN and three non-ASEAN signatories.
The trade pact, which includes a mix of high-income, middle-income, and low-income
countries, was conceived at the 2011 ASEAN Summit in Bali, Indonesia, while its negotiations
were formally launched during the 2012 ASEAN Summit in Cambodia. It is expected to
eliminate about 90% of the tariffs on imports between its signatories within 20 years of coming
into force, and establish common rules for e-commerce, trade, and intellectual property.
The agreement is intended to reduce tariffs and red tape. It includes unified rules of
origin throughout the bloc, which may facilitate international supply chains and trade within the
region. The RCEP is not as comprehensive as the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership, another free trade agreement in the region that includes some of the
same countries.
The coverage areas of RCEP include trade in goods; trade in services, investment, economic and
technical cooperation, intellectual property, competition, dispute settlement, e-commerce, small
and medium enterprises (SMEs) and other issues.

The objective of launching RCEP is to achieve a modern, comprehensive, high-quality and

mutually beneficial economic partnership framework, progressively liberalize and facilitate trade
in goods, elimination of tariff and non-tariff barriers and liberal, facilitative, and competitive

30
investment environment among the ASEAN Member States (Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and ASEAN’s FTA
partners (Australia, China, India, Japan, South Korea, and New Zealand).

Several analysts predicted that it would offer significant economic gains for signatory nations, as
well as "pull the economic centre of gravity back towards Asia, with China poised to take the
lead in writing trade rules for the region", leaving the U.S. behind in economic and political
affairs. Reactions from others were neutral or negative, with some analysts saying that the
economic gains from the trade deal would be modest. The RCEP has been criticized for ignoring
labor, human rights, and environmental sustainability issues.

Carbon Tax
A carbon tax that works as a sort of "pollution tax" is a tax levied on the carbon emissions
required to produce goods and services. David Gordon Wilson first proposed a carbon tax in
1973. A carbon tax is a type of Pigouvian tax, meaning a tax that businesses or individuals must
pay due to engaging in activities that cause adverse side effects for society. A carbon tax is paid
by businesses and industries that produce carbon dioxide through their operations. The tax is
designed to reduce the output of greenhouse gases and carbon dioxide. The tax is imposed with
the goal of environmental protection.

International experience shows that environmentally sensitive countries have taken several
measures to reduce the rate of growth of emission. Bangladesh is a strong actor in the effort to
reduce global carbon emission. This is appropriate as it faces a major burden from global climate
change. Although per capita carbon emission is low, total carbon emission in Bangladesh is
growing. Consequently, as a good global team player, Bangladesh committed to reducing its
carbon footprint in its Intended Nationally Determined Contributions (INDC) submissions in
2015.

Green diplomacy
A diplomacy that seeks to harmonize the interests of a state and other's interests along with the
interests of every human being on the Planet, concerning the conservation and development of
natural conditions of life. It is a special form of the classical diplomacy. Unlike traditional
diplomacy, the ’green Diplomacy “aims at raising awareness & common interests in the
management and protection of the shared natural heritage of humanity. Regardless of the
geographical areas where people live, they are on the same planet and are equally affected by the
global environmental problems that they generated.

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 Corporate Social Responsibility (CSR)
CSR is a concept whereby financial institutions not only consider their profitability and growth,
but also the interests of society and the environment by taking responsibility for the impact of
their activities on stakeholders, employees, shareholders, customers, suppliers and civil society
represented by NGOs, the process of communicating the social and environmental effects of
organizations' economic actions to particular interest groups within society and to society at
large. CSR had four real significances-

• Position against corruption, human rights,

• Justice to the interest of employees and
• Environment protection

Corporate social responsibility is observed as an extensive set of policies programs and

methods that are integrated all over the business activities and decision-making process to
confirm transparent business practices. By incorporating corporate social responsibility policies,
organization fasten their responsibilities towards the environment, employees, suppliers,
communities, consumers and the other members of the community and perform their social
obligation by enhancing community development and eradicating the practices which harm it.

Corporate Social Responsibility (CSR) has possessed equal importance of corporate financial
performance. CSR is not just philanthropy it is more than that. CSR is a concept whereby
companies integrated social and environmental concerns into their business operation and
interaction with their stakeholders on a voluntary basis. CSR has internal and external practices.
Internal refers to directly related with the physical and psychological working environment of
employees. External CSR refers to responsibility for local community as well as business
partners, suppliers, customers, public authorities and NGOs’ representing local communities and
the environment such as philanthropy, volunteerism and environmental protection.

32
BB issued CSR policies and guidelines on June 2008 and December 2014 for mainstreaming
CSR in banks and NBFIs in Bangladesh and for end use monitoring of CSR engagements of the
financial sector. These policies and guidelines clearly state the requirement of administrative
setup, budgetary allocation, expected range/coverage of CSR activities and end use monitoring
process of CSR expenditures and activities. Besides that, on June, 2015 BB issued reporting
format for monitoring CSR activities of banks and FIs.

CSR expenditure (million BDT) of Banks & NBEIs in 2020 is as follows-

The pyramid of CSR is as follows-

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CSR is an undivided part of sustainable development. Bhagwat, P. (2011) illustrated CSR’s
relationship with sustainable development with help of following Figure.

Letter of credit
An LC is a financial document provided by a third-party (with no direct interest in the
transaction), mostly a bank or a financial institution, that guarantees the payment of funds for
goods and services to the seller once the seller submits the required documents. A letter of credit
has three important elements – the beneficiary/seller who is the recipient of the LC, the
buyer/applicant who buys the goods or services and the issuing bank that issues the LC on the
buyer’s request. At times, there is an involvement of another bank as an advising bank that
advises the beneficiary.
There are various types of letter of credit (LC) prevails in the trade transactions. They are
Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable,
Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause,
Sight, Deferred Payment, and Direct Pay LC.

The entire process under LC consists of four steps:

Step 1 - Issuance of LC

Step 2 - Shipping of goods

Step 3 - Providing Documents to the confirming bank

Step 4 - Settlement of payment from importer and possession of goods

To understand the process clearly, look at this image-

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 Generation of Bank
The banking sector of Bangladesh is continuously growing with new banks coming in every now
and then. Considering the year of establishment the banking sector of Bangladesh is classified in
generations. There are four generations of banks in Bangladesh:

I. 1st Generation (Before 1991)

II. 2nd Generation (After 1991 – Before 1999)

III. 3rd Generation (After 1999 ¬– Before 2010)

IV. 4th Generation (After 2010 – Present)

Online Banking
A method of banking in which transactions are conducted electronically over the internet. Online
banking, also known as internet banking, web banking or home banking, is an electronic
payment system that enables customers of a bank or other financial institution to conduct a range
of financial transactions through the financial institution's website. The online banking system

35
will typically connect to or be part of the core banking system operated by a bank to provide
customers access to banking services in place of traditional branch banking.

Advantages of online banking are –

• Pay bills online

• Transfer money
• Deposit cheques online
• Lower your overhead fees
• Cash transfers to vendors and suppliers
• Viewing account balances
• Checking recent transactions
• Transferring money between accounts
• Obtaining statements
• reduction of the banks' operating cost
• time saving
• Completion of banking transactions even when branches are closed

Disadvantages of online banking

• Technology disruptions
• Privacy and security concerns

Bangladesh’s top 5 Bank’s internet banking mobile apps are-

1. City Bank (City Touch)

2. Eastern Bank Ltd (EBL SKYBANKING)
3. Standard Chartered Bank (SC Mobile Banking)
4. Dutch Bangla Bank (NexusPay)
5. Mutual Trust Bank (MTB Smart Banking)
6. BRAC Bank (BRAC BANK Mobile)

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 Volume of transactions using ATM, Debit and Internet Banking from 2013-2018

Features of Internet Banking

Account Summary
The Customer will be able to view the list of Current, Saving, Term Deposit and Loan accounts
with the current balance.
Account Details
The Customer can choose a particular account and see the account details including unclear fund,
limit, interest accrued etc.

Account Activity
The customer can see or print his transaction activity in a given account for a particular period.

Transfer Funds
The customer can transfer funds from one of his accounts to another of his accounts within the
bank but not allowed by Bangladesh Bank regulations and rules.

Third Party Transfer

The customer can transfer funds from one of his accounts to another customer's account within
the bank.

Pay Bills

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The customer can pay his utility bill (like Dutch Bangla Bank Ltd Credit Card Bills, Alico,
Mobile, Tuition Fees etc.)

Standing Instructions
The customer can setup, modify or delete standing instructions for transferring fund from one of
his account to another account (his account or 3rd party).

Open/Modify Term Deposit

The customer can open a term deposit by transferring funds from one of his current or savings
accounts with the bank. He can also modify the TD and redeem / part-redeem it.

Loan Repayments
The customer can make payment of the loan installment from his CASA account.

Statement Request
The customer can make a request for account statement for a required period. The bank will
manually service this request.

Cheque Book Request

The customer can make a request for a Cheque book.

Cheque Status Inquiry

The customer can choose an account and enter the Cheque number for which the status should be
viewed.

Stop Payment Cheque

The customer can mark his Cheque leaf as stop payment.

Interest Rate Inquiry

The customer can query on the interest rates on CASA & Term Deposit Products.
Foreign Exchange Rate Inquiry
The customer can query on the Foreign Exchange (FX) Rates using this function.

Change Password
The customer can change his Internet Banking Password using this function.

Additional Internet Banking Features for Corporate Banking

Letter of Credit
The customer can initiate the LC application through Internet Banking.

Bank Guarantee
The customer can initiate the Bank Guarantee through Internet Banking.

Limits Query
The customer can view his Loan Limits and Limits Utilization through Internet Banking.

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 Specialized Economic Zone

Special economic zones (SEZs) – geographically delimited areas within which governments
facilitate industrial activity through fiscal and regulatory incentives and infrastructure support –
are widely used across most developing and many developed economies. It is an area in which
the business and trade laws are different from the rest of the country. SEZs are located within a
country's national borders, and their aims include increasing trade balance, employment,
increased investment, job creation and effective administration.

Different Types of Special Economic Zone are-

• Free-trade Zones (FTZ)

• Export Processing Zones (EPZ)
• Free Zones/ Free Economic Zones (FZ/ FEZ)
• Industrial Parks/ Industrial Estates (IE)
• Bonded Logistics Parks (BLP)
• Urban Enterprise Zones.

The main features are: (1) a special regulatory regime: zones normally operate under more liberal
economic laws than those that typically prevail, regarding issues such as labor, land use, and
foreign investment; (2) public services: zones are normally serviced with efficient customs, fast-
track registration and licensing, often through “one-stop-shop” services; (3) infrastructure: zones
have much better and more reliable infrastructure such as roads, power, and water, compared to
the domestic economic environment; and (4) fiscal incentives: the zone’s investors, particularly
its anchor investors, often enjoy capital freedoms and certain levels of tax incentives and
subsidies.

Demographic Dividend
Demographic dividend is defined as the economic growth potential that can result from shifts in
a population’s age structure, mainly when the share of the working-age population is larger than
the non-working age share of the population (UNFPA). Bangladesh is going through the
demographic transition, and is experiencing a once-in-a-lifetime demographic dividend as the

39
working-age population bulges and the dependency ratio declines. More people in the working
age group and lower dependency ratio mean higher saving and investable surplus, leading to
higher economic growth. In Bangladesh, the 1st demographic dividend starts in 1980 and
continues for a period of 60 years up to 2040.

The demographic dividend is the difference between the number of working-age-population aged
15-64 years and the number of non-working-age-population under 14 years of age and above 65
years of age. That is, if the number of working people is greater than the number of non-working
people, then it is a demographic dividend. According to economists, there are four benefits to a
demographic dividend:

• Improving labor supply,

• Growth of savings
• Human capital and
• Domestic market expansion.

These four benefits can be ensured if functional youth force can be harnessed.

Bangladesh faces following socio-economic challenges which are impediment toward getting the
dividend-

1. Investments by framing proper policy

2. Poverty reduction and formation of pro-poor policy
3. Skill development programs of migrant workforce
4. Development of infrastructure
5. Integration between Government, Academia and Industry
6. Flexibility in labor Market and Product Market in Bangladesh
7. Providing Rural Prosperity in Agriculture and agro-based industries
8. Women’s economic, social and political participation
9. Promotion of good governance

66 percent of the population of Bangladeshis aged between 15 and 64 years, and belong to the
workforce. By 2030, the population of this age group would rise to 70 percent, but then it will
start declining, according to the UNDP's Asia Pacific Human Development Report launched in
Dhaka on April 26, 2015.19 percent of the country's population is between 15 and 24 years,
which hold immense potential, but the number will decline after 2030. The number of people
aged above 60 years in the country is now 11 million, which would be 22 million in 2030 and 44
million in 2050.This means that Bangladesh needs to invest right now in the human capital of its
young people if it wants to reap the benefits of a large demographic dividend.

Now is the time to boost the country's economy by engaging this working population in
productive socio-economic activities. China, South Korea, Vietnam, Taiwan and Thailand, for
example, have taken their economic position to new heights through the effective use of

40
demographic dividends. Policy choices can potentiate Bangladesh’s realization of economic
benefits stemming from demographic change. Failure to take advantage of the opportunities
inherent in demographic change can lead to economic stagnation.

Financial inclusion
Financial inclusion is defined as the availability and equality of opportunities to access financial
services. It refers to a process by which individuals and businesses can access appropriate,
affordable, and timely financial products and services. These include banking, loan, equity,
savings, remittances and insurance products. Microfinance is the most dominant method for
achieving financial inclusion.

It aims to include everybody in society by giving them financial services regardless of their
income or savings. It focuses on providing financial solutions to the economically
underprivileged.

A study conducted by the Bangladesh Institute of Bank Management (BIBM) shows that
financial inclusion of the total population was 39.76 per cent in 2004 which rose to 56.42 per
cent in 2010 due to the opening of 9.0 million Tk 10 farmers' accounts in state-owned banks.

Objectives of financial inclusion

The objectives of financial inclusion are to provide the following:

• A basic no-frills banking account for making and receiving payments

• Saving products (including investment and pension)
• Simple credit products and overdrafts linked with no-frills accounts
• Remittance, or money transfer facilities
• Micro insurance (life) and non-micro insurance (life and non-life)
• Micro pension

Major activities of BB for financial inclusion are-

1. Digital Financial Services (DFS)

2. Agent Banking
3. Re-fixed the rural urban branch ratio to 1:1
4. Mobile Financial Services
5. Introduction of Automated Teller Machine (ATM)
6. Licensing of PSPs and PSOs
7. No-Frill Accounts
8. School Banking
9. Banking for the Working Children
10. Web portal for financial literacy
11. Introduction of e-KYC and Simplified Account Opening Form

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 12. Annual agricultural credit policy
13. Preparing National Financial Inclusion Strategy (NFIS)
14. Bangladesh Automated Cheque Processing Systems (BACPS) in 2010
15. Bangladesh Electronic Funds Transfer Network (BEFTN) in 2011
16. National Payment Switch Bangladesh (NPSB) in 2012 and
17. Real Time Gross Settlement System (RTGS) in 2015
18. Allow banks to establish Small and Medium Enterprise (SME) branches, Agri-branches,
collection booths and business development centers

Barriers in Financial Inclusion:

• Limited geography (isolated areas) and small population;
• Limited access to social and economy for low income people or minority ethics; and
• Limited opportunities for new enterprise due to inability to access the services
• Lacking of suitable financial literacy
• Lack of documentation
• Religious reasons
• Too expensive
• Limited bank branches
• Lacking of suitable banking products

BB has been following a ‘Three Dimensional Action’ of financial inclusion-

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Six elements of financial inclusion are-

Money laundering
Money laundering is the process by which proceeds from a criminal activity are disguised to
conceal their illicit origins. The Financial Action Task Force on Money Laundering (FATF)
defines the term “money laundering” succinctly as “the processing of criminal proceeds to
disguise their illegal origin in order to legitimize the ill-gotten gains of crime.” The fundamental
cause of money laundering in any country is the evasion of tax. Same holds true for Bangladesh
as well. As the source of earning this money is illegal, for example, drugs dealing, human
trafficking, smuggling, bribery, gambling etc., the earner always tries to make the source remain
covered with the flavor of legitimate business. Hence, to protect the illegally earned money from
confiscation is another reason for money laundering. BD’s rank (lower rank indicates a higher
risk for money laundering) in anti-money laundering is as follows-

43
In Bangladesh, the prime cause of money laundering is lack of political transparency and good
governance which has created and encouraged corruption in all sectors of the society. The
second reason is huge informal employment and unimaginably high informal transaction in the
economy that left lots of undefined sources. Lastly, political instability or pseudo stability is a
major concern for the riches that somehow compel them to look for external destination.

Process of Money Laundering

Fig: Steps of the Process of money laundering

The process of money laundering is accomplished into three stages: placement, layering and
integration. Placement is the first stage of the process which brings the illegal earnings into the
financial system. In the second stage, known as layering, the money is moved or transferred into
the financial system through multiple transactions so that its authentic origin can be hidden. The
last stage is integration though which the illegal money appears legitimate in the financial
system. The three basic steps may occur as separate and distinct phases. They may also occur
simultaneously or, more commonly, may overlap.

The implications of money laundering for a developing country such as Bangladesh are colossal.
Money laundering diminishes government tax revenue. It leads to misallocation of resources and
transfers economic power from the market, government, and citizens to criminals. It has severe
social and political costs as laundered money may be used to corrupt national institutions. Money
laundering causes hike in price level, which triggers inflation. Gini coefficient, represents the
income or wealth distribution of a nation’s residents, and is the most commonly used measure of
inequality, will go higher if small part of the society holds significant portion of money of the
economy.

To battle the problems of money laundering, the government enacted the Money Laundering
Prevention Act in 2002. Then, in 2007, the government enacted the UN Convention against
Corruption (UNCAC). Also in 2007, the government recognized the Central Bank’s Anti-Money
Laundering Department (AMLD) as the country’s official Financial Intelligence Unit (FIU). In

44
2008, the government promulgated the Money Laundering Prevention Ordinance (MLPO 2008)
and the Anti-Terrorism Ordinance (ATO 2008). Both ordinances facilitate international
cooperation in battling money laundering, including working to recover funds illegally
transferred to or from foreign countries.

Money laundering must control by performing effective steps and ensuring strong punishment
for the crime. Such as-

• Financial institutions and Banks should provide adequate training to their employees to
control money laundering;
• Illegal channels of transferring remittance should be stopped and banks should provide a
higher exchange rate;
• Govt. should take necessary steps to improve ethics and morality, religiousness, and the
patriotism of people;
• Tax rate and import duty shouldn’t be as much as high that become a burden for the
taxpayers;
• Inflation should be controlled and a safe deposit should be confirmed in the home
country;
• Every country should create more investment opportunities and ensure lower risk
investment opportunities;
• Strong punishment must be ensured for the individuals who have involvement in the
money laundering activities, and
• Suspicious transactions should investigate before and after the transactions and illegal
transactions must be punishable. No transaction should allow to those who are involved
in illegal transactions.

To control money laundering, we can also follow the following steps-

Vision-2041
Vision 2041 is a national strategic plan of BD to farther develop the socio-economic standing of
the Peoples Republic of Bangladesh, issued by Prime minister Sheikh Hasina and formulated
by National Economic Council. To transform the dream of Father of the Nation Bangabandhu

45
Sheikh Mujibur Rahman into reality-where there is free of poverty, where economic and social
justice prevails, and where there is shared prosperity, Vision 2041 is a continuation of Digital
Bangladesh Vision 2021 and seeks to take the nation to the development path. Specifically,
Vision 2041 seeks to eliminate extreme poverty and reach Upper Middle-Income Country
(UMIC) status by 2031, and High-Income Country (HIC) status by 2041 with poverty
approaching extinction. To convert Vision 2041 into a development strategy, with policies and
programmes, this document launches ‘Making Vision 2041 a Reality: Perspective Plan of
Bangladesh 2021-2041’ (PP2041). The PP2041 builds on the successes of PP2021, while also
drawing on the good practice experiences of current UMICs and HICs that have already travelled
the development path that Bangladesh is endeavoring to travel.

This document is the development vision of the government of a prosperous Bangladesh, a

strategic description of the goals and objectives and a roadmap for its implementation. Vision
2041 and the associated PP2041 rely on four institutional pillars that will be harnessed by the
people, who are the principal drivers of growth and transformation. These are

(i) governance;
(ii) democratization;
(iii) decentralization and
(iv) Capacity building.

The main beneficiary will be the people of Bangladesh and they will be the key driving force of
growth and transformation. Shared prosperity is a basic thrust of the PP2041. The Perspective
Plan (2021-2041) would cover the periods of 8th, 9th, 10th and 11th Five Year Plans through
which objectives of PP2041 would be attained. The vision document consists of twelve chapters-
including topics ranging from governance, human development, industry and trade, agriculture,
power and energy to ICT and climate change and environment. It also includes macroeconomic
framework which gives targets in each financial year of important macro indicators in more
detail.

Strategic Goals and Milestones of the PP2041

The following strategic goals will be pursued as the essential components of economic policy
over the long-term:

• Eradication of Extreme Poverty by 2031; reducing Poverty to less than 3 percent by

2041,
• Towards Upper middle-income country by FY 2031; High-income country by 2041,
• Industrialization with export-oriented manufacturing will drive structural transformation
into the future,
• Paradigm shifts in Agriculture will enhance productivity and ensure nutrition and food
Security for the future,

46
 • A Service sector of the future will provide the bridge for the transformation of the rural
Agrarian economy to a primarily industrial and digital economy,
• The Urban transition will be an essential part of the strategy to move to a high-income
Economy,
• Efficient Energy and Infrastructure will be essential components of the enabling,
Environment that facilitates rapid, efficient and sustainable growth,
• Building a Bangladesh resilient to climate change and other environmental challenges,
• Establishing Bangladesh as a knowledge hub country for promoting a skill-based society

Two principal visions underpin the PP2041:

• Bangladesh will be a developed country by 2041, with per capita income of over USD
12,500 in today’s prices, and fully in tune with the digital world.
• Poverty will become a thing of the past in Sonar Bangla.

TTT Title
Target FY31 Target FY41
Real GDP Growth (%) 9.0 9.9
CPI inflation (%) 4.7 4.5
(as % of GDP)
Gross Investment (%) 41.15 46.9
Gross National Savings (%) 37.18 43.95
Total government revenue (%) 19.55 24.15
Total government expenditure
24.55 29.15
(%)
(growth rate)
Exports 11.65 11.00
Imports 12.05 10.00
Remittances 4.50 2.00
Poverty (headcount, %)
Extreme Poverty (%) 2.25 0.68
Poverty (%) 7.02 2.59
Source: GED projections

Table: Key Macroeconomic Indicators for PP2041

8th five year plan

The Honourable Prime Minister Sheikh Hasina realized the importance of effective planning and
as such formulated a large number of long and medium-term plans, following the philosophy and
path of development shown by the father of the nation Bangabandhu Sheikh Mujibur Rahman.
The preparation of Eighth Five Year Plan was commissioned in 2019. Initially, a ‘National

47
Steering Committee’ was formed under the chairmanship of the Honorable Minister of Planning
to oversight the preparation of the plan. A ‘Panel of Economists’, under the chairmanship of Dr.
Wahiduddin Mahmud, has also been formed comprising luminous Bangladeshi economists,
sociologists, educationalists and experts on relevant fields, who gave continuous support in
shaping the Eighth Five Year Plan. A total of twenty five background studies have also been
conducted with the help of the eminent experts in their respective fields.

The Eighth Five Year Plan is unique compared to its preceding two plans as it blends the
COVID-19 recovery strategies in the macroeconomic framework as well as developing sectoral
strategies in the plan. The government was in strong favor of the continuation of the Five Year
Plan instead of formulating a separate COVID-19 response plan as discontinuation of the Five
Year Plan could slow down the ongoing development initiatives of the government, which are
extremely essential to face the challenges of LDC graduation, to meet the targets of SDGs and to
fulfill the aspiration of the Vision 2041. Besides, the implementation of the Perspective Plan (PP)
2021-2041 is envisaged in four ‘Five Year Plans’; the first quinquennium starts with the Eighth
Five Year Plan. Hence, the main objective of the Eighth Five Year Plan is to start the
implementation of PP2021-2041 in a way that it brings Bangladesh closer to the goals of
achieving UMIC status by 2031 and attaining SDGs targets through managing the challenges of
LDC graduation, which will also help to eliminate extreme poverty by 2031.

The Eighth Five Year Plan centers around six core themes, which are (i) rapid recovery from
COVID-19; (ii) GDP growth acceleration, employment generation and rapid poverty reduction;
(iii) a broad-based strategy of inclusiveness; (iv) a sustainable development pathway that is
resilient to disaster and climate change; (v) improvement of critical institutions necessary to lead
the economy to Upper Middle Income Country status by 2031; and (vi) attaining SDGs targets
and mitigating the impact of LDC graduation.

The plan document has been organized around two broad parts. The first part delineates the
macroeconomic framework for the plan period (July 2020-June 2025) along with strategic
directions and policy framework for promoting inclusiveness, reducing poverty and inequality. It
also describes the resource envelop and overall fiscal management tools of the government and
specifies the Development Results Framework (DRF) for proper monitoring and evaluation. The
second part sets out the sectoral strategies for thirteen sectors (except defense) with some
specific targets to attain by FY 2025.

The Eighth Plan sets to hit the target of 8.51 per cent GDP growth by FY 2025. To accommodate
this growth target, the gross investment needs to be raised to 36.59 per cent of GDP by FY 2025
in which private investment will capture the lion’s share (27.35 per cent of GDP). The service
and manufacturing growths will be the major drivers of GDP growth in this journey. During the
Eighth Plan period, the government will also strengthen its initiatives to ensure inclusive growth
that will bring down the incidence of poverty to 15.6 per cent and extreme poverty to 7.4 per

48
cent. The proper implementation of any plan needs efficient monitoring and evaluation. The
Eighth Five Year Plan adopts a better informed DRF, drawing on the good experiences of the
Sixth and Seventh Plans. Both core macro and sectoral quantitative results will be monitored,
with the help of 104 DRF indicators (more than half of which are related to SDGs), to measure
the effective implementation of the Eighth Plan. A mid-term review of implementation progress
is planned at the end of FY 2023, while a final implementation review will be done at the end of
FY 2025, i.e. after the completion of the plan.

(For various types of Data under 8th five year plan, please see ‘Important Quantitative Data’ section)

CAMELS
CAMELS rating is a supervisory tool to identify banks which require increased supervision. To maintain a
stable financial system and a productive economy, it is important to estimate and examine the performance of banks
carefully. A bank’s good financial health protects its depositors, as do stakeholders, employees and the country's
economy as a whole.Bangladesh Bank introduced CAMEL Rating System in 1993 as an integral
part of Offsite Supervision System. Initially, report was prepared on the half-yearly basis for all
banks. Subsequently in 1999, Board of Directors of BB advised to prepare the reports of State-
owned Commercial Banks (SCBs) on quarterly basis. Due to the emergence of the banking
sector and changes in the economic scenario, BB Management updated the previously practiced
CAMEL based Supervision System to "Guidelines for Determination of CAMELS Rating for the
Banking Companies".

The CAMEL Rating System was first introduced in the US in 1979. In the 1970s, a CAMEL-rating model was first
created in order to provide a straightforward description of the banking situation in the context of the on-site review
by three U.S. Federal Reserve, FDIC, and OCC federal bank supervision bodies in the statutory "Uniform Financial
Institutions Rating System". The banks were evaluated under the abbreviation C-A-M-E-L for five separate
components.

C: Capital Adequacy
A: Asset Quality
M: Management Efficiency
E: Earnings Capacity and
L: Liquidity
For each part of the CAMEL, the banks earned a score between “1” and “5” and a final CAMEL score reflecting
the total amount of the CAMEL score as a measure of the overall situation of the bank. In 1996, the CAMEL
method was revised, when agencies added an extra “S” parameter in order to determine “demand
responsiveness” and thus named “CAMELS” In 2006, Bangladesh Bank has upgraded the CAMEL into
CAMELS. ‘Sensitivity to market risk’ or ‘S’ is the new rating component which is included in CAMEL and
make it into CAMELS. HHI (Herfindahl-Hirschman Index) has been incorporated in the CAMELS rating
guideline to analyse loan portfolio concentration, as a complement to percentages of classified loans
and provisioning in the evaluation of asset quality.

The numerical ratings assigned to the criteria are:

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Rating
Rating Range Rating Analysis Rating Analysis interpretation
Scale
Sound in every respect, no supervisory
1 1.0-1.4 Strong
responses required
Fundamentally sound with modest correctable
2 1.6-2.4 Satisfactory
weakness, supervisory response limited.
Combination of weaknesses if not redirected will
Fair (watch
3 2.6-3.4 become severe. Requires more than normal
category)
supervision
Immoderate weakness unless properly addressed
Marginal (some
4 3.6-4.4 could impair future viability of the bank. Needs
risk of failure)
close supervision.
Unsatisfactory
High risk of failure in the near term. Under
5 4.6-5.0 (high degree of
constant supervision/cease and desist order.
failure evident)

Camels Numerical Rating: Rating Description

1. STRONG: It is the highest rating and is indicative of performance that is
significantly higher than average.
2. SATISFACTORY: It reflects performance that is average or above; it includes
performance that adequately provides for the safe and sound operation of the banks.
3. FAIR: Represent performance that is flawed to some degree. It is neither satisfactory nor
unsatisfactory but is characterized by performance of below average quality.
4. MARGINAL: Performance is significantly at below average; if not changed, such
performance might evolve into weaknesses or conditions that could threaten the viability
of the bank.
5. UNSATISFACTORY: Is the lowest rating and indicative of performance that is critically
deficient and in need of immediate remedial attention. Such performance by itself, or in
combination with other weakness, threatens the viability of the institution.

The ratios relating to CAMEL frameworks are given below at a glance:

Acronym Parameters of Ratios of measuring CAMEL

CAMEL parameters
Capital Adequacy i) Capital Adequacy Ratio
ii) Debt- Equity Ratio
iii) Loan & Advances to Total
Assets Ratio
iv) Govt. Securities to Total
Investment
Ratios

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Asset Quality i) % of NPLs to Total Loans
ii) Total Investment to Total
Assets Ratio
iii) % of NPLs to Total Assets
Management Quality i) Loan & Advances to Deposit
Ratios
ii) Return on Equity ( ROE)
iii) Net Profit per Employee
Earning Ability i) Return on Asset (ROA)
ii) Net Profit Margin ratio
iii) Interest Income to Total
Income Ratio
iv) Net Interest Margin to Total
Assets
Ratio (Spread)
v) Earnings Per Share (EPS)
Liquidity i) Liquid Assets to Total Assets
Ratios
ii) Liquid Assets to Total
Deposits Ratio
Sensitivity to Market Risk The sensitivity of the market
risk is evaluated by banks
through changes in interest
rate, foreign
exchange rates and equity
prices. The changes in these
variables influence bank's
earning ability.
So, sensitivity to market risk
measures how adversely the
bank is affected by such
changes. The
sensitivity to market risk is
estimated based upon the
following key financial ratio.
Price Earnings Ratio=
𝑴𝒂𝒓𝒌𝒆𝒕 𝑽𝒂𝒍𝒖𝒆 𝒑𝒆𝒓 𝑺𝒉𝒂𝒓𝒆/
𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝑺𝒉𝒂𝒓𝒆

Climate Diplomacy

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There exists no universal definition of climate diplomacy. The European Commission defines
four strands of climate diplomacy at the political level:

• Committing to multilateralism in climate policy, particularly to the implementation of the

Paris Agreement
• Addressing implications of climate change on peace and security
• Accelerating domestic action and raising global ambition
• Enhancing international climate cooperation though advocacy and outreach

In this sense, climate diplomacy encompasses the use of diplomatic tools to support the ambition
and functioning of the international climate change regime and to attenuate the negative impacts
climate change risks pose for peace, stability and prosperity. Furthermore, climate diplomacy
entails using the issue of climate change for furthering other foreign policy objectives such as
confidence- and peace-building or strengthening multilateralism. Climate diplomacy calls for
preparing appropriate risk assessment and risk management strategies at a global strategic level.

Climate diplomacy also means prioritizing climate action with partners worldwide – in
diplomatic dialogues, public diplomacy and external policy instruments. This includes reaching
out to partner countries bilaterally and making the case for more ambitious climate action.
Climate diplomacy is, to a great extent, preventive diplomacy.

Over the years, V20 and CVF platforms have become the standout diplomatic maneuvers for
inter-governmental cooperation to mitigate the adverse effects of climate change and raise the
voices of the most vulnerable countries in the global climate regimes. Evidently, in this regard,
the host of the first-ever virtual V20 Climate Vulnerable Finance Summit – Bangladesh, has
emerged as a global leader in the realms of climate diplomacy. Bangladesh has endeavored
significant strides towards making the best use of diplomatic platforms to address the concerns of
climate change and environmental issues. Despite being a climate-prone nation with resource
constraints, Bangladesh, over the years, has emerged as a global role model on climate
diplomacy. On per official documents, every year Government of Bangladesh is spending about
$5 billion, about 2.5% of the GDP, on climate adaptation, mitigation, and resilience-building
measures. During this year, Bangladesh adopted the ‘Mujib Climate Prosperity Plan’ and,
accordingly, Bangladesh is planting 30 million saplings nationwide Plan’ to materialize its
ambition for low-carbon economic growth. Bangladesh is one of the forerunner countries that
establish ‘Climate Change Trust Fund’ and formulated the Bangladesh Climate Change Strategy
and Action Plan (BCCSAP) to respond to the wraths of climate change prudently.

In the global arena, Bangladesh takes pride for being a founding member of the Climate
Vulnerable Forum (CVF) founded in 2009. CVF remarkably becomes the flagship international
partnership of countries highly vulnerable to global warming. As CVF chair during 2011-2013,
Bangladesh’s Leadership for Climate Vulnerable nations was much appreciated previously.
During its tenure, the forum successfully managed to uphold itself as a vibrant platform of

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South-South cooperation of the member states to act together to deal with climate emergency and
global warming. Over the last decade, CVF and V-20 emerged as significant players in the arena
of climate diplomacy.

47th G7 summit
The 47th G7 summit was held on 11–13 June 2021 in Cornwall, England in the United
Kingdom while it holds the presidency of the Group of Seven (G7) inter-governmental political
forum. The participants included the leaders of the seven G7 member states as well as
representatives of the European Union. The President of the European Commission has been a
permanently welcome participant at all meetings and decision-making since 1981, while the
current President of the European Council has been the EU's co-representative since the 36th G8
summit.
The Group of Seven (G7) is an inter-governmental political forum consisting of the United
States, Canada, France, Germany, Italy, Japan and the United Kingdom, the heads of which hold
an annual summit with European Union and other invitees. Together the member countries
represent 40% of global GDP and 10% of the world’s population. Unlike other bodies such as
NATO, the G7 has no legal existence, permanent secretariat or official members. It also has no
binding impact on policy and all decisions and commitments made at G7 meetings need to be
ratified independently by governing bodies of member states.
Agenda
The G7 summit provides a forum for member countries to discuss shared values and
concerns. Major agenda in 2021 are as follows-
• Developing a response to the COVID-19 pandemic
• Climate change
• International co-ordination on economic policies
• Regulation of digital currencies
• Peace in the Taiwan Strait
• A billion doses of COVID-19 vaccine
• Elimination of coal power
• Tech giants and tax haven (agreed on a minimum 15% corporate tax rate)

Reaction from China

China reacted negatively to the summit, accusing the group of "meddling, lies, and false
accusations", and denounced the group's support for the violent Hong Kong protest movement
and for Uyghur militants in the Xinjiang region. China has also warned the G7 leaders that the
days when a "small" group of countries decided the fate of the world were long gone.

America is back

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“America is back at the table,” declared US President Joe Biden as he sought to consign some of
the friction between his predecessor and the world community to the political past. He also said
the summit had been "extraordinarily collaborative".
Important information

Host country United Kingdom

Date 11–13 June 2021

Motto Building Back Better

Venue(s) Carbis Bay, St Ives, Cornwall

Participants Canada
France
Germany
Italy
Japan
United Kingdom
United States
European Union

Invited guests India

South Africa

South Korea

Australia

Criticisms:

Critics say the promises were not new, lacked in detail and some were plainly insufficient. The
communique did not set out a detailed country-by-country commitment or a timetable to act on
the global vaccination campaign, and many of the commitments had been agreed in advance.

“G7 leaders have utterly failed to face up to the challenges facing the world,” said Nick
Dearden, director of campaign group Global Justice Now. After a weekend of diplomacy all they
have done is repeat their own inadequate climate targets and fail to meet their own inadequate
targets for global vaccination. “This G7 has been a pointless exercise in grandstanding without
making any substantive progress towards tackling the crises of our lifetimes. This summit proves
beyond all doubt that the G7 is not fit for purpose,” Dearden said. Paul Donovan, chief
economist at UBS Global Wealth Management, referred to the G-7 as a “selfie summit.”

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Speaking to CNBC’s “Squawk Box Europe,” Donovan added: “We haven’t had the same sort of
direct, big impact. We have had lots of vague statements.”

Digital currency

Digital currency is a form of money or cash that is available only in digital or electronic form,
and not in physical form. It could be called digital money, electronic money, electronic currency,
or cybercash. They are only accessible with computers or internet-enabled mobile phones.
Digital currencies are not exactly cryptocurrency. The difference is that all cryptocurrencies are
digital currencies, but not all digital currencies are crypto.

Like any standard fiat currency, digital currencies can be used to purchase goods as well as to
pay for services, though they can also find restricted use among certain online communities like
gaming sites, gambling portals, or social networks. For example, instead of using physical dollar
bills, you’d make purchases by transferring digital currency to retailers using your mobile
device.

Digital currencies have all intrinsic properties like physical currency, and they allow for
instantaneous transactions that can be seamlessly executed for making payments across borders
when connected to supported devices and networks. Since digital currencies require no
intermediary, they are often the cheapest method to trade currencies. Digital currencies are stable
and are traded with the markets, whereas cryptocurrencies are traded via consumer sentiment and
psychological triggers in price movement.

Digital currencies are intangible and can only be owned and transacted in by using computers or
electronic wallets connected to the Internet or the designated networks. For instance, it is
possible for an American to make payments in digital currency to a distant counterparty residing
in Singapore, provided that they both are connected to the same network required for transacting
in the digital currency. In contrast, physical currencies, like banknotes and minted coins, are
tangible and transactions are possible only by their holders who have their physical ownership.

Digital currencies offer numerous advantages. As payments in digital currencies are made
directly between the transacting parties without the need of any intermediaries, the transactions
are usually instantaneous and low-cost. This fares better compared to traditional payment
methods that involve banks or clearing houses. Digital currency-based electronic transactions
also bring in the necessary record keeping and transparency in dealings.

At present, digital currencies are not accepted by banks, and as a result, interest cannot be earned
on them by individuals or organizations. There are also risks associated with digital currencies
such as security, currency volatility and payment beneficiary identification. Some areas of

55
uncertainty like compliance with regulations and customer identification along with risk, limit
the acceptance of digital currencies in the payment industry.

Central Bank Digital Currency (CBDC)

A central bank digital currency (CBDC) uses an electronic record or digital token to represent
the virtual form of a fiat currency of a particular nation (or region). A CBDC is centralized; it is
issued and regulated by the competent monetary authority of the country. Bangladesh's CBDC
may bring enormous benefits in terms of its digital aspirations and for its young population. With
the country's high teledensity and a growing number of mobile internet users, it will be easier to
cover a large population of the country with the rollout of CBDC.

The young age of Bangladesh's population and the higher rate of literacy among this group will
also be helpful in adapting to new currency transactions easily. Unlike public cryptocurrencies
like bitcoin, Bangladesh's CBDC will likely be useful to the common people, who will be able to
use it for their regular buying and selling activities. Retail transactions are likely to get faster and
cheaper.

For the central bank, commercial banks, and other direct and indirect operators in the financial
markets of Bangladesh, the time has arrived to upskill themselves with this new paradigm of
digital currency. Bangladesh has demonstrated its capability to scale up effectively in multiple
areas of financial transactions such as mobile money transfer. However, getting ready for this
new paradigm of money and its nationwide rollout will require comprehensive planning and
effective execution of the plan. Setting up a task force with professionals from financial
institutions, technology organizations, and academia may be a good first step.

KEY TAKEAWAYS

• A central bank digital currency (CBDC) utilizes technology to represent a country's

official currency in digital form.
• Unlike decentralized cryptocurrency projects like Bitcoin, a CBDC would be centralized
and regulated by a country's monetary authority.
• While several governments are looking into the viability of creating and issuing CBDCs,
no country has officially launched such money.

Understanding Central Bank Digital Currencies

Over the years, there has been growing interest in cryptocurrencies like Bitcoin and Ethereum,
which work on a distributed ledger technology known as the blockchain network. Such virtual
currencies have gained immense popularity, owing to their decentralized and regulation-free
nature; with some seeing their rise as a possible threat to the traditional banking system that
operates under the purview and control of a country’s regulatory authority, such as a central
bank. There is no clarity about any suitable reserve maintenance to back up the valuations of
cryptocurrencies. Additionally, the continued launch of new cryptocurrencies has also raised
concerns about the possibility of scams, thefts, and hacks.

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Unable to control the growth and influence of such cryptocurrencies, many leading central banks
across the globe are working on or contemplating launching their own versions of
cryptocurrencies. These regulated cryptocurrencies are called central bank digital currencies and
will be operated by the respective monetary authorities or central banks of a particular country.

Also called digital fiat currencies or digital base money, CBDC will act as a digital
representation of a country’s fiat currency, and will be backed by a suitable amount
of monetary reserves like gold or foreign currency reserves.

Each CBDC unit will act as a secure digital instrument equivalent to a paper bill and can be used
as a mode of payment, a store of value, and an official unit of account. Like a paper-based
currency note that carries a unique serial number, each CBDC unit will also be distinguishable to
prevent imitation. Since it will be a part of the money supply controlled by the central bank, it
will work alongside other forms of regulated money, like coins, bills, notes, and bonds.

CBDC aims to bring in the best of both worlds—the convenience and security of digital form
like cryptocurrencies, and the regulated, reserved-backed money circulation of the traditional
banking system. The particular central bank or other competent monetary authority of the
country will be solely liable for its operations.

Examples of CBDCs
To date, no country has officially launched a central bank-backed digital currency. Many central
banks, however, have launched pilot programs and research projects aimed at determining a
CBDC's viability and usability.

On May 20, 2021, Federal Reserve Board Chair Jerome H. Powell announced that the U.S. Fed
plans to publish a paper in the summer of 2021 that will explore the implications of issuing a
U.S. central bank digital currency, to complement the research already underway.

The Bank of England (BOE) was the pioneer to initiate the CBDC proposal. Following that,
central banks of other nations, like China’s People’s Bank of China (PBoC), Bank of Canada
(BoC), and central banks of Uruguay, Thailand, Venezuela, Sweden, and Singapore, among
others, are looking into the possibility of introducing a central bank-issued digital currency.

Russia has been moving forward with its creation of the "crypto-ruble," announced by Vladimir
Putin in 2017. It is speculated that one of the main reasons for Putin's interest in blockchain is
that transactions are encrypted, and thus easier to discreetly send money without worrying about
sanctions placed on the country by the international community. This theory gained traction after
the Financial Times reported in Jan. 2018 that one of Putin's economic advisors, Sergei Glazyev,
said during a government meeting that "This instrument (i.e., the CryptoRuble) suits us very well
for sensitive activity on behalf of the state. We can settle accounts with our counterparties all
over the world with no regard for sanctions."

Glazyev himself was placed under sanctions by President Obama that prevented him from
trading in or traveling to America in 2014.

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Venezuela has been purported to be working on a CBDC called the "petro" since 2017, which
would be backed by physical stocks of crude oil. The Venezuelan government also announced
"petro gold" in 2018, allegedly pegged to the value of oil, gold, and other precious metal.

Difference between Digital, Virtual, and Crypto Currencies

Since they exist in a lot of variants, digital currencies can be considered a superset of virtual
currencies and cryptocurrencies. Essentially, both virtual currencies and cryptocurrencies are
considered forms of digital currencies.

Digital Currencies Virtual Currencies Cryptocurrencies

Regulated or An unregulated digital A virtual currency that uses cryptography to

unregulated currency currency that is controlled by secure and verify transactions as well as to
that is available only its developer(s), the founding manage and control the creation of new
in a digital or organization, or the defined currency units. Bitcoin and ethereum are the
electronic form. network protocol. most popular cryptocurrencies

Cryptocurrency
A cryptocurrency is a digital asset, digital or virtual currency designed to work as a medium of
exchange wherein individual coin ownership records are stored in a ledger existing in a form of a
computerized database using strong cryptography to secure transaction records, to control the
creation of additional coins, and to verify the transfer of coin ownership. Cryptocurrency does
not exist in physical form (like paper money) and a defining feature of cryptocurrency is that it is
typically not issued by a central authority. Cryptocurrencies typically use decentralized control
as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted or
created prior to issuance or issued by a single issuer, it is generally considered centralized. When
implemented with decentralized control, each cryptocurrency works through distributed ledger
technology, typically a blockchain, that serves as a public financial transaction database. Bitcoin,
first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the
release of bitcoin, many other cryptocurrencies have been created.

The word “cryptocurrency” is derived from the encryption techniques which are used to secure
the network. "Crypto" refers to the various encryption algorithms and cryptographic techniques
that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and
hashing functions. They are generally not issued by any central authority, rendering them
theoretically immune to government interference or manipulation.

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Best cryptocurrencies by market capitalization
These are the 10 largest trading cryptocurrencies by market capitalization as tracked by
CoinMarketCap, a cryptocurrency data and analytics provider.

Cryptocurrency Market Capitalization

Bitcoin $735.3 billion
Ethereum $324.2 billion
Tether $61 billion
Binance Coin $57.5 billion
Cardano $54.6 billion
XRP $46.5 billion
Dogecoin $44 billion
Polkadot $22.1 billion
USD Coin $21.9 billion
Internet Computer $16.7 billion

Advantages
Cryptocurrencies hold the promise of making it easier to transfer funds directly between two
parties, without the need for a trusted third party like a bank or credit card company.
These transfers are instead secured by the use of public keys and private keys and different forms
of incentive systems, like Proof of Work or Proof of Stake.

In modern cryptocurrency systems, a user's "wallet," or account address, has a public key, while
the private key is known only to the owner and is used to sign transactions. Fund transfers are
completed with minimal processing fees, allowing users to avoid the steep fees charged by banks
and financial institutions for wire transfers.

Disadvantages
The semi-anonymous nature of cryptocurrency transactions makes them well-suited for a host of
illegal activities, such as money laundering and tax evasion. However, cryptocurrency advocates
often highly value their anonymity, citing benefits of privacy like protection for whistleblowers
or activists living under repressive governments. Some cryptocurrencies are more private than
others.

The popularity of cryptocurrency is a headache for central regularity authorities like BB.BD
does not allow the mining or transaction of any form of cryptocurrency.

Build Back Better Plan

The Build Back Better Plan is a projected $7 trillion COVID-19 relief, future economic, and
infrastructure package proposed by President Joe Biden. It will include investments in
infrastructure, and is projected to create 10 million clean-energy jobs. Expenditures would also
include government funds on housing, education, economic fairness and health care.
The plan is divided into three parts:

59
 • The American Rescue Plan- a COVID-19 relief package passed in March 2021;
• The American Jobs Plan- a proposal to rebuild America’s infrastructure and create
jobs; and
• American Families Plan- a proposal to invest in areas related to childcare and education.
Together, these plans will rebuild an economy where every American enjoys a fair return for
their work and an equal chance to get ahead. An economy more vibrant and more powerful
precisely because everybody will be cut in on the deal. Biden believes this is no time to just build
back to the way things were before, with the old economy’s structural weaknesses and
inequalities still in place. This is the moment to imagine and build a new American economy for
generation and the next generation.

Vision

Shortly before the inauguration of Joe Biden as the 46th president of the United States, Biden
laid out the following goals for his "Build Back Better" agenda:

• "Build a Modern Infrastructure"

• "Position the U.S. Auto Industry to Win the 21st Century with technology invented in
America"
• "Achieve a Carbon Pollution-Free Power Sector by 2035"
• "Make Dramatic Investments in Energy Efficiency in Buildings, including Completing 4
Million Retrofits and Building 1.5 Million New Affordable Homes"
• "Pursue a Historic Investment in Clean Energy Innovation"
• "Advance Sustainable Agriculture and Conservation"
• "Secure Environmental Justice and Equitable Economy Opportunity"

Build Back Better World

Build Back Better World or B3W is an initiative undertaken by G7 countries. Launched in 2021,
the initiative is designed to counter China's strategic influence by providing an alternative to the
Belt and Road Initiative for the infrastructural development of the low and middle income
countries. Led by the United States, the G7 countries will provide around $40 trillion to the
developing countries by 2035 under the plan. The funds will be generated from the private sector
and will be invested in four areas: - "climate, health and health security, digital technology, and
gender equity and equality".

The B3W efforts are guided by the standards and principles of the Blue Dot Network, relating to
the environment and climate, labor and social safeguards, financing, construction, anticorruption,
and other areas. B3W will be global in scope, from Latin America and the Caribbean to Africa to

60
the Indo-Pacific. Different G7 partners will have different geographic orientations, but the sum
of the initiative will cover low- and middle-income countries across the world.

Together with leaders of the G7, the Biden Administration fully endorses the following guiding
principles of B3W:

• Values-Driven
• Good Governance and Strong Standards
• Climate-Friendly
• Strong Strategic Partnerships
• Mobilize Private Capital Through Development Finance
• Enhancing the Impact of Multilateral Public Finance

The B3W, despite being a highly lucrative and prosperous model, is idealistic if presented as a
competition to the BRI. Simply because the G7, majorly the United States, elides the ground
realities and averts its gaze from the labyrinth of complex relations shared with China. The only
good that could be achieved is if the B3W manages to find its own unique identity in the region,
separate from BRI in nature and not rivaling the scale of operation. While Biden has remained
vocal to assuage the concerns regarding the B3W’s aim to target the trajectory of the BRI, the
leaders have remained silent over the detailed operations of the model in the near future. For
now, the B3W would await bipartisan approval in the United States as the remaining partners
would develop their plan of action. Safe to say, for now, that the B3W won’t hold a candle to the
BRI in the long-run but could create problems for the G7 members if it manages to irk China in
the Short-run.

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